Commercial Mortgage FAQS

A Commercial Mortgage is a type of term finance, designed to purchase or refinance commercial property, either as an owner-occupier, or an investment basis. Learn more >

Commercial Mortgage FAQS

How much can I borrow with A Commercial Mortgage?

Some Commercial Mortgage lenders will lend up to 75% of your property’s value (or LTV – Loan to Value) This will be based on your individual deal, property type and your personal situation. If the loan is for a commercial premises that your business will occupy it is a ‘owner-occupied’ loan and will be based on your businesses’ income. Conversely, if the property is a commercial investment, then the loan amount will be based on how much the property will rent/lease for.

How much deposit do I need for A Commercial Mortgage?

The minimum deposit for a Commercial Mortgage is at least 25%. The more deposit that you can raise, the better the terms that will be available.

Can I get interest-only on a Commercial Mortgage?

Yes. A Commercial Mortgage lender may offer interest only although, as with a residential mortgage, you will need to show how you intend to pay back the loan at the end of the term, either by paying it off with funds that will be available or by selling the property.

What’s the process to apply for a Commercial Mortgage?

The first step to apply for a Commercial Mortgage would be to find the right lender who may be willing to lend to you and who has confidence in your proposed project.

The next steps would involve:

• Initial enquiry and formal application

• Heads of terms issued

• Lender due diligence (borrower checks, valuations)

• Formal loan offer and acceptance

• Legal documentation

• Solicitor completion and release of funds

Do I need experience to apply for a Commercial Mortgage?

No. There are Commercial Mortgage lenders who will consider borrowers with little or no experience.

What fees will I pay for taking out a Commercial Mortgage?

Commercial Mortgage fees include:

• Arrangement or facility fee – This is usually a percentage of the loan amount and may sometimes be added to the loan.

• Valuation Fee – A fee to cover the cost of the surveyor who will consider many factors including the value, any major defects, the rental/lease income and how saleable the asset would be if the lender needed to repossess the property.

• Legal Fees – You will have your own legal fees, and you are required to pay for the lenders legal work that needs to be done.

Can I get a Commercial Mortgage with bad credit?

As with most forms of borrowing, having adverse credit can have an impact on; either your ability to obtain finance, or the terms that are available to you. A Commercial Mortgage is no different in this regard.

Do I need a broker to find a Commercial Mortgage deal?

No. You can do your own research, but it will be very time consuming as Commercial Mortgage lenders do not generally publish their criteria and appetite for specific deals so it would involve calling each one individually. A good mortgage broker with Commercial Mortgage experience will be a valuable asset to you and use software to submit your enquiry to multiple providers and find you the best solution quickly.

Are there any early repayment charges on a Commercial Mortgage?

Typically, yes. Commercial Mortgage’s are designed as a longer-term type of finance, this means there will usually be early repayment charges.

Can I get a Commercial Mortgage where there is an element of residential housing?

Yes. There are Commercial Mortgage lenders that offer Semi-Commercial Mortgages. The loan would then be calculated on the potential rental income of the residential property, plus any income from the Commercial part. An example of this would be a shop with a flats above, all on one title.

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Book A Call To Discuss Commercial Mortgages

If you have an enquiry and would like to discuss Commercial Mortgages in more detail, please get in touch or schedule one of our Commercial Mortgage experts to give you a call.

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At MRG Private Clients, we believe in providing our clients with personalised guidance and support when it comes to making important financial decisions. We are based in Medway, Kent but offer our specialist mortgage services nationwide. Learn more about our specialist mortgage services >