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Commercial sector explainedWhat are commercial owner occupier mortgages? What sort of interest rate will I pay on a commercial mortgage? What factors affect the lending and interest rates decision? What mortgage interest rate will I pay? How much can I borrow and for how long? Do I need to move my day-to-day business banking? Are all property types as easy to fund as one and other? Commercial investment mortgage borrowing guidelines What are commercial investment mortgages? What sort of interest rate will I pay on a commercial mortgage? What factors affect the lending and interest rates decision? What mortgage interest rate will I pay? How much can I borrow and for how long? Are all property types as easy to fund as one and other? Commercial property investment market overview What are the returns on commercial property? Ask a question about Commercial Mortgages Commercial owner occupier mortgage borrowing guidelines: What are commercial owner occupier mortgages?
Commercial owner occupier or business mortgages are used by
individuals or companies wishing to purchase a property as a
business premises. What sort of interest rate will I pay on a commercial mortgage? Unlike residential mortgages, commercial mortgages are individually priced based on the strength of the proposition being placed with the mortgage lender.
Additionally the mortgage lender will price a commercial mortgage
based upon their thirst towards a particular sector. If a bank is over exposed
(i.e. they have lent heavily) to a type of industry then their
interest rate will be less favourable then perhaps a competitor
because by lending further in a sector they exposure themselves to
a greater level of risk. What factors affect the lending and interest rates decision? All factors relate to showing evidence to the lender of the business strength. These will include audited accounts with evidence of ongoing profit and a business plan highlighting to the lender where the business is going in the future. Lending will
also be affected by the business trading performance and industry
sector. What mortgage interest rate will I pay? Commercial owner occupier mortgages are all individually priced above Bank of England Base Rate or LIBOR (London Interbank Offer Rate). The mortgage rate paid will be vastly different depending on the strength of the transaction and business.
If the business is a new start up or has no audited / incomplete
accounts the mortgage rate will be much higher than a blue chip
company with a long track record and proven
profitability. How much can I borrow and for how long? The absolute maximum would be 85% loan to property value meaning you would need a 15% deposit. However 85% is rarely achieved, a more realistic figure to consider would be between a maximum of 70% to 80%.
The maximum borrowing period will be 30 years, although the
majority of lenders will lend over 25 years. Do I need to move my day-to-day business banking? No, and in many cases it is a good idea to keep the two separate, because if the borrower stays with their current bank, the bank has precise details of every transaction the company has made for the period the borrower has been banking there.
The common problem is the lack of knowledge amongst borrowers, they
have numerous financing options outside their day-to-day banking
arrangements. However,
the majority of borrowers still only consult their local
bank.
Are all property types as easy to fund as one and other?
No, certain property types are deemed by mortgage lenders to
present a higher level of potential risk and are therefore more
expensively priced, these will include property types such as
garages and nightclubs. Commercial investment mortgage borrowing guidelines: What are commercial investment mortgages?
Commercial investment mortgages are designed for commercial
property landlords purchasing commercial property as an investment,
with a view to making money from rental from a tenant and from
ongoing increases in commercial property values. What sort of interest rate will I pay on a commercial mortgage? Unlike residential mortgages, commercial mortgages are all individually priced based on the strength of the proposition.
Commercial investment mortgage rates are determined by the strength
of the tenant. For
example a Blue Chip company who have signed a twenty year lease are
going to attract a far more preferable rate for a commercial
landlord, than a borrower who has a new business start up on a
short lease as the tenant. What factors affect the lending and interest rates decision?
Again the strength of the tenant will be important, but the lender
will also be looking for a proven track record in commercial
property investment. What mortgage interest rate will I pay?
Commercial investment mortgages are all individually priced above
Bank of England Base Rate or LIBOR (London Interbank Offer
Rate). The mortgage
rate paid will be vastly different depending on the strength of the
tenant and the industry sector. How much can I borrow and for how long? The absolute maximum would be 85% loan to property value meaning you would need a 15% deposit. However, 85% is rarely achieved, a more realistic figure to consider would be between a maximum of 70% to 80%.
The maximum borrowing period will be 30 years, although the
majority of lenders will lend over 25 years. Are all property types as easy to fund as one and other?
Yes, better quality asset types will tend attract a preferable
interest rate. The
industry sector will also affect the ability to borrow and the
interest rate, particularly difficult to fund properties will
include golf clubs, nightclubs, social clubs, nursing homes and
petrol stations.
Commercial property investment market
overview: What are the returns on commercial property?
According to the Investment Property Databank (IPD) total returns
in 2005 were 19.1%.
These returns take into account revenue gained form rental and from
capital growth in the value of the property itself.
In 2005, the highest returning property type were offices with
20.4% returns, industrial returns with 18.4% returns and retail
with returns of 18.8%. Ask a question about Commercial Mortgages If you would like to ask a question or if you need any information regarding Commercial Mortgages please aska a question below: For more information on Buy To Let and Development Finance please use these links. |
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ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
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