Improve your ability to get a business mortgage by following our How to get a commercial mortgage guide;
Why follow a “get a commercial mortgage” guide?
With more than 25 years arranging commercial mortgages for all sorts of different customers and businesses, we’ve seen cases which other brokers consider impossible, and funded them!
Conversely, we’ve also seen businesses which should easily be able to get the mortgage they need, fail, because of the basics!
Before you apply for a commercial mortgage
- Maintain your credit file – Although your business (or company) may be the mortgage applicant, the lender is still going to look at the credit profile of those controlling the business – so the partners or directors and main shareholders. If they have poor credit then that’s going to reflect in who will lend on the application and the terms on offer.
- Have some form of deposit – Unlike a residential mortgage a commercial mortgage is generally to a maximum loan to value of 75% (although in some cases more will be available). That means that the applicant company or business owner might have a significant amount to find as a deposit and to cover the fees and costs of arranging the mortgage and the legal transfer of the property. There are exceptions to this, so please discuss with your broker. Some exceptions are;
- Purchase of a professional practice, especially (but not only) medical and related professions, purchase of premises for an existing practice or remortgaging the premises. Up to 100% of the property value can be available.
- Sitting tenants of some businesses who have an existing lease, especially pubs, hotels and restaurants, care homes, day nurseries and other businesses where goodwill is a factor. Up to 90% of purchase price is commonly available for these businesses.
- Many other businesses which other assets, debtor books or regular consumer trade can access additional funds, through a variety of other funding products. Discuss your situation with one of our commercial mortgage specialists and we’ll find a way to get the funding you need.
- Be able to afford the repayments – Your lender is going to want to know how you can repay the commercial mortgage, ideally you’ll be able to show that you can afford it already, but in some instances we can work on projections to prove it.
Making your commercial mortgage application
When you are ready to make your application to get a commercial mortgage, you’ll need to provide quite a lot of information to your broker to get the application underway, this is likely to include the following;
- Accounts for your business or the business you’re buying, to show affordability.
- Projections if the accounts don’t show sufficient profit for affordability.
- Bank statements to show your “conduct” for the last 3 – 6 months. Generally making sure that payments are not returned and there’s not a heavy reliance on overdraft.
- Details of the property and a rationale for the purchase if that’s not already obvious.
- For each partner, director or major shareholder;
- Proof of identity – generally a copy of your passport or driving licence.
- Proof of address – typically a recent utility bill.
- A statement of Assets, Liabilities, Income and Expenditure.
- For some lenders, personal bank statements will also be required.
- If you have any questions around your credit file then please provide a copy. We do not credit search our clients until the lender does so.
Why would we tell you how to get a commercial mortgage?
We’ll be successful with your application faster if the information we need is ready for us.
We’ll waste less time with the wrong lenders because we understand your case faster.
You’ll get the funding you need – when you need it!