‘Is my bank best for my commercial mortgage?’
Taking out a commercial mortgage can be a daunting task for any business, especially when you are operating the business and trying to choose the best option. Is your own bank going to be competitive? Do you have enough free hours to test the water with another lender?
Banks have preferred sectors and red lines, requirements around how much they will lend and how much profit you need to show.
As a market leading commercial mortgage broker your Acorn.finance expert will guide you through the maze and pair you with the ideal lender for your circumstances.
Commercial mortgage lenders have strict lending criteria meaning they need a lot of information about you and your business before they will agree to lend.
Working with an experienced business mortgage broker in Acorn.finance means that take the time to understand your business plan and history before we begin work with our selected lender. That way you provide the information once and we work with the lender to arrange your commercial mortgage while you continue operate your business.
Knowing the bank’s commercial mortgage policy is bread and butter to the commercial mortgage brokers at Acorn.finance. Before your business mortgage application goes near a lender we’re certain that you’re going to be successful.
Only by knowing everything can we guarantee that!
The mistakes business owners make’
We all have our own business specialities, that applies to you, me and the banks.
Too often I meet would be business owners who have been turned down by “the bank” and have given up on their dream.
60% of business owners only apply to their own bank, as a broker Acorn.finance have hundreds of lending sources to access the best possible commercial mortgage for your needs.
The days of meeting the bank manager on the golf course and agreeing on a commercial mortgage in the “19th hole” are over. Loans and mortgages for small businesses are business and need to be treated as such.
If you expect a bank to put money behind your business, probably twice the money you are putting in, then you need to think like a business owner.
‘Only approach the wrong bank!’
As with many sectors of business vendor’s ideas of the value and those of the surveyor or the bank can be wildly different.
If your bank manager or broker is not a specialist in your sector will they be able to advise if the unit you are buying is overpriced or a bargain?
The value of a business isn’t it’s idyllic location or how beautiful it is, it’s how much money it’s making (or how much it’s going to make for you!).
So – by all means you should look for businesses where you’d like to live and the right place for you, but you also need to be “head over heart” and make sure you’re not buying something which is going to end up a money pit.
Why are the vendors selling it?
Applying as a limited company so that the bank won’t need a personal credit search or in a single name so they won’t know your partner’s a bankrupt is probably not going to work – lender’s have seen all the dodges before and your bank won’t like it if you keep secrets!
The business plan is an important part of any business acquisition – making an application without any sort of plan shows a lack of commitment to the purchase and, if you’re not committed why would a bank commit their money to support you?
There’s a multitude of different ways to finance your perfect business yet 60% of business owners give up at the first knock. That’s not a dream, that’s a fleeting fancy, a whim!
As an award-wining finance broker Acorn.finance work with all the lenders in the market, firstly assessing applications to understand which bank or lender is most likely to approve funding, then working closely with them to turn an “agreement in principle” into a full offer and finally, into a successful business purchase or refinance.
The best Return on Investment (ROI)
Working with the best lender for your particular proposition means that your deposit will go further and you’ll be able to buy a more profitable business. Getting the best possible business for your money could man the difference between massive success and failure. Of course the right business with the most potential is perfect for the some, while tweaking an already good business works for others.
It’s important to understand your personal strengths and skills before settling on which unit to purchase.
Buying a profitable business means less risk, even if you are borrowing more the fact that the business is already capable of paying the business loan or commercial mortgage then the risk is far lower than that of starting from scratch.
Saving you time – getting the business you want faster
Working with the Acorn.finance experts will mean you’ll be moving into your perfect business before the competition have even got off the starting blocks.
By working together we’ll;
- Gain an understanding of your needs, skills and experience.
- Work with you and the agents to match these to the perfect business (often a business which is not on the open market).
- Get the right application pack into the right hands quickly.
- Work with all the relevant professionals to ensure things progress.
- Keep working until the day you move in, and beyond.
A commercial mortgage is essentially any mortgage which is on property other than your own home.
That usually means that the property is owned or being purchased to make a return.
Where your business will be paying the mortgage directly, that is termed a “trading business mortgage“.
Your business might be any kind of business and thus the premises could be just as varied, from retail to financial or technology companies, we all need office, shop or workshop space to function from and if you’re renting it from a landlord you could well find that a commercial mortgage will be cheaper over the longer term and a great investment in your future business.
In a similar manner to a buy to let mortgage, (which in itself is a commercial mortgage) a commercial investment mortgage may be used to purchase any commercial property to then be let out to another business to operate from.
It’s often more complex than a regular buy to let transaction so there’s more involved in the lending decision as to how easy the unit might be to let out, who the tenant is and how much experience you have in dealing with similar matters.
Acorn.finance experts will help you through the process and ensure your commercial mortgage is the most suitable out there for your particular needs.
Where the major banks will rarely approve commercial mortgages to clients who have poor credit, be it in the company name or personally, the range of lenders at the disposal of your Acorn.finance advisor means that we can guarantee to get your application approved.*
Always let your broker know from the outset what your problem was, when it happened and why. With that knowledge we can work with the lenders to get your application approved on the best possible terms and interest rates. Trying to hide this information causes delays and can result in an overall rejection of your case.
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Because the commercial mortgage market is so complex and reliant on so many more variables than a residential mortgage (for your own home) there is no search engine able to predict how a particular bank will lend against a proposal. That’s where we come in as an experienced broker, we work with all the lenders operating in the market to arrange the best possible commercial mortgage for our clients, whatever their situation.
‘Details about Commercial Mortgages’
For a trading business mortgage, you can borrow anything from 50% to 100% of the property value.
There is a huge range there and it’s not the case that you can decide where you want to be on that scale. The maximum loan or “loan to value” as it’s termed in the finance world is based on;
- Your background as a client, do you have a good track record?
- Does the business trading history easily support the commercial mortgage payments, even if there’s a downturn or an increase in interest rates?
- Is the business in a sector which is seen as high risk or low risk?
- If everything went wrong how easily could the property be sold off?
The interest rates for commercial mortgages vary massively, just like those on residential loans, but the variables are more complex, so it’s difficult to predict on a website what your mortgage rate is going to be.
We’ve arranged mortgages from as low as 1.5% plus bank base rate but if you have a high risk business or adverse credit then you might have to pay substantially more than that.
Before you commit to a business purchase or remortgage make sure you talk to Acorn.finance to get the best advice on the rates you’ll be paying.
There can be some substantial costs arranging a commercial mortgage when compared to a residential mortgage so we’ll give you an idea of them before we get started.
Arranging a commercial mortgage is far more complex and each part of the work is completed by a specialist. You’ll need to cover;
- Valuation fee – as commercial property is much more complex than a residential report, often running to 20 or 3o pages, these are often more expensive.
- Arrangement fees – to cover the work put into underwriting your case, the broker and the lender may both charge a fee.
- Legal fees – You’ll need a solicitor who is conversant with your business sector and commercial mortgages to complete the legal work. The lender might instruct your solicitor to act on their behalf or may instruct their own firm. In complex cases the legal bill can be quite high. To get an instant legal fee quotation click here for our panel.