Commercial Mortgages, FAQ’s
These FAQs cover a large area of specialised, technical areas of Mortgages. As no two situations are the same, only the basic position is outlined. The answers do not provide a complete or authoritative statement of the law, nor do they constitute legal advice by the author. The information provided is only a snapshot: it does not create a contractual relationship nor does it form part of any other advice, whether paid or free.
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Commercial Mortgages and Funding
Q. Where can I get a commercial mortgage?
A. Your local bank is a good starting point, though some will not lend to certain types of business. You need to clarify this point with them, if they do provide commercial mortgages get a quote or a good indication of the conditions, interest rates and the deposit required, then shop around, we have access to a number of mortgage brokers.
Q. What are the advantages of a commercial mortgage over renting?
A. By purchasing the property with a commercial mortgage you have the potential gain on the asset (the freehold building). You will not be at the mercy of of a landlord over rates and occupancy term as the commercial mortgage rate will generally track base rate or LIBOR rate, you can also arrange fixed rates on commercial mortgages. All money that is paid each month on the commercial mortgage will gradually reduce the mortgage balance (assuming a capital repayment mortgage is taken), whereas with rent you are not gaining any long term equity.
Q. Will I need a deposit to obtain a commercial mortgage?
A. Some companies are able to lend up to 75% on commercial mortgages with no additional security, however if you are able to provide an additional security i.e. your home or a investment property, then we could arrange a commercial mortgage up to 100% of the value.
Q. Can I get a commercial mortgage on my existing commercial property to consolidate my debts or invest in another business?
A. Yes, if you own your commercial property and wish to arrange a commercial mortgage for the purpose a re-mortgage for consolidation purposes than we are able to arrange the commercial mortgage for you, you can use the additional funds for any legal purpose.
Q. Do I need to have a perfect credit history to get a commercial mortgage?
A. No! We can provide commercial mortgages to customers who not only have credit issues, but who have also had CCJs, taken out Individual Voluntary Arrangements (IVAs) or have liquidation history.
Q. Can I get a commercial mortgage if I do not have accounts or if I am only just starting up?
A. Commercial mortgages can be arranged based on freehold value within sensible parameters, though it is far simpler if you have a proven business record or the business has audited accounts from the previous owners.
- Accounts do not show a strong net profit
- Just recently started the business
Q. How long does it take to complete a commercial mortgage?
A. This depends on which commercial mortgage lender your commercial mortgage is placed through, some companies say they can arrange commercial re-mortgages within as little time as 7 days.
Q. Can you get fixed rates on your commercial mortgages?
Yes, but it is dependent on which lender is most suitable for your requirements, some can source fixed rates from 3 years up to 10 years, these rates are generally based on the lenders SWAP rates which fluctuate on a day to day basis.
Q. Do I get penalised for early redemption?
A. You normally have a minimum period before you can redeem a mortgage, sometimes they do make allowances for extenuating circumstances, mortgage companies do like to collect on the small print, do read the small print and if you are not sure get your solicitor to explain it to you.
These FAQ’s are for your guidance, more complex or specific issues, you may or will need to consult a specialist.
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