Mortgages

By admin ⋅ March 5, 2009 ⋅ Email This Page ⋅ Print This Page ⋅ Post a comment

Shop around for the best deals. The commercial agents will have at least one mortgage broker to propose and they are also paid a commission for promoting them. Avoid paying any up front mortgage investigation fees. Try all the high street banks, they have commercial mortgage divisions. If you do go with your local bank, always have a second bank account with Giro or ideally another high street bank. Always keep the second bank in credit and in use for specific activities, if the first bank with your mortgage or overdraft gets difficult then you can switch to your second account and transfer your borrowings, especially if it has always been in credit. At the moment High Street Banks are very wary of pubs, specialist brokers are probably your greatest source until this credit crisis is over,

You will need to produce a business plan at some stage to get a mortgage. You can only do this when you have some idea of the business takings, with the flow pattern during the year. Draft out some ideas and then consult your accountant, if nothing more than to authenticate your projections or if you are having trouble getting them into a professional and acceptable shape for a bank or mortgage provider.

It can pay to do two projections – one realistic and one optimistic. If you find that you are exceeding the realistic projection and moving toward the optimistic one then you can forward plan any future development. Again I would suggest a graph with both projections for easy identification of the takings flow against the actual takings as they come in.

The mortgage company may insist on the equivalent of a Pinder Report. This is an independent assessment of the business potential of the pub. They are not cheap but may be essential if you are close to your borrowing capability.

If you are considering a lease as a cheap option to leave your capital intact, you may find that the actual mortgage repayments on similar type properties are cheaper than the rental payments on a lease with the deposit on the freehold equating to the purchase price for the lease.

I met a couple who paid £145,000.00 for a lease with a rent of about £75,000.00 per annum and a turnover of £450,000.00. I suggested that there were some good freehouses on the market with similar turnovers and their mortgage payments would be far less and their capital growth far greater. They declined because it was a pub that they had fallen in love with.