We were approached by a couple who run a bistro with sea views in the West Country. They were looking for help to remortgage the premises which they have owned on an extremely long leasehold basis for ten years with a commercial mortgage on interest only terms.
The loan term was nearing maturity and now that they had considerable trading experience under their belts, they wanted to move to a capital repayment facility which would make them mortgage-free in line with their retirement plans.
As well as the interest-only commercial mortgage, the clients also had a £20k overdraft with their bank and a loan from a crowdfunding group which they had used to carry out refurbishment works. In total, they needed finance of £240k to repay all three outstanding loans.
The clients had requested that, if at all possible, they would like to use a lender that would give them a local business relationship manager as they were not keen on dealing with people at faceless call centres.
We approached a high street bank with a relationship manager based in the same local area. As well as meeting the client's request, this ensured that the bank already had a working understanding of the seasonal nature of the business accounts, which is a trait common to the whole area. We've worked with this lender on numerous occasions and have successfully placed similar deals.
We helped the couple put together a business plan in an acceptable format and submitted a formal mortgage application. A valuation was carried out which confirmed that the property would make suitable security for the loan.
We accompanied our clients to the loan interview to assist with the negotiations. The ensuing discussion revealed that the bank was concerned about the ownership structure of the restaurant - the couple own the premises personally but the bistro is operated by their limited company. As is common in these cases, the bank confirmed it would lend to the couple subject to the limited company guaranteeing the mortgage payments and the bank taking a debenture over the business too.
All parties agreed, the following terms were formally issued and the mortgage completed without further delay:
Property value: £400,000
Loan amount: £240,000
Rate: Bank Base Rate (currently 0.25%, variable) plus 3.2%
Term: 15 years capital and interest
Borrower: Joint personal with Ltd company guarantee
Mortgage payment: £1,424 pcm
Lender arrangement fee: £3,600 (1.5%)
Consultant: Paul Keddy, 01732 471655
14th September 2017