Commercial Mortgages

Commercial mortgages, are specifically designed for individuals or businesses looking to purchase a property as a business/investment asset.

There are two types of commercial mortgage – an owner-occupier mortgage for trading premises and a commercial investment mortgage for those looking to invest in commercial property.

An owner-occupier commercial mortgage is suitable for individuals or businesses who purchase property with the intention of trading from it whilst securing an asset/investment at the same time.

Commercial investment mortgages are designed for individuals or businesses looking to purchase a property to generate income by renting out the property.

Commercial mortgages can be structured in many different ways including onshore, offshore, company name, LLP, trust or personal name.

What can Commercial Mortgages be used for?

Commercial mortgages can be used for a range of reasons but at Coreco Commercial we specialise in commercial mortgages for real estate investment purchases such as:

• Owner occupied Commercial premise/building. This could range from units/warehouses to shops.
• Commercial Investment Property.
• Mixed use property – Semi Commercial, commonly a commercial unit with residential above.
• Large HMO properties typically 10+ bedrooms
• PBSB – Purpose Built Student Block.
• PRS Block – Private Rented Sector.
• Portfolio Lending – Cross Charging against more than one property.

With our knowledge of the lenders within the commercial mortgage sector our team will find the best lender suited to your needs and support you in every step of the journey, from application to completion.

Key Considerations

Before taking out a commercial mortgage there are several things you need to consider including affordability, deposit levels, the impact on your business and the outcome of getting a commercial mortgage.

Affordability

Lenders will judge whether the mortgage you’re applying for and the repayment terms associated with them are something you can afford to pay back, just like a regular residential mortgage. Unlike a residential mortgage, it won’t be your personal income they look at but rather your business earnings before interest, tax liabilities, asset depreciation and amortisation.

Commercial Mortgage deposit requirements

Commercial mortgage deposits are different from residential mortgage deposits. Where residential mortgages can be found with higher loan to value ratios, these can be much harder to come by in the commercial market. Deposit levels for commercial mortgages are often governed by:

• The property
• The potential/passing rental income
• The strength of the borrower/tenant
• Affordability if owner occupied

With the mortgage markets changing on a near daily basis get in contact with an advisor who will be able to give you the latest, up-to-date information that’s relevant to your situation. You can request a call back at a time convenient to you or send us a message and one of our team will be in contact, usually within a few hours*!

*during our working hours, Mon-Fri, 9:00-17:00

Applying For A Commercial Mortgage

1. The first step is to talk to one of our commercial advisors who will get to know you, your business and what you’re looking to achieve with your commercial mortgage.
2. Once your advisor understands your requirements they will source lending from the the commercial mortgage market to find the most suitable mortgage for your requirements.
3. We’ll then get back to you and talk you through the lending terms and confirm what information/documents the lender needs from you.
4. Your advisor will then complete the application and get that sent off to the lender. We’ll keep you updated with the progress along the way and once complete you’ll have access to your funds.

Throughout the process your advisor will be on hand to answer any questions you have, support you with your paperwork and keep you informed.

Getting Your Paperwork Ready

In general mortgage lenders require the following information however when it’s time to apply your advisor will be able to let you know what your chosen lender needs.

• Latest three years’ accounts (or tax returns).
• Current and projected performance figures.
• Bank statements.
• Details of all the directors and significant shareholders.
• Full details of company structure and details of any group/subsidiary holding.
• Personal Asset and liability statements.
• Any tenant or lease details (for commercial investment mortgages).

Commercial Mortgage Eligibility

When it comes to commercial mortgage eligibility there is a slight difference between investment commercial mortgages and owner-occupied commercial mortgages. The difference lies in how you plan to pay back your mortgage, for an investment commercial mortgage this would be through the rental income of the property. With an owner-occupied mortgage, you’ll pay back the mortgage with the income/profit derived from the business.

For both types of commercial mortgage lenders are happy to accept a wide range of business structures including:

• Limited companies
• Partnerships
• Offshore companies
• Sole traders
• LLPs

Other factors that can impact the eligibility for a commercial mortgage include:

• Your trading experience
• The sector your business operates in
• The type of premises you want to mortgage
• The location of the premises

Alternatives to commercial mortgage

There is a range of alternatives to commercial mortgages, depending on the value you want to borrow and how quickly you need to progress.

A bridging loan allows you to move forward with your purchase of the property quickly and then switch to a commercial mortgage once the sale is complete.

If you would like to speak to a specialist commercial mortgage broker, we’re on hand to help. Call 020 7220 5100 or visit our contact page for more contact options including email and livechat.