News

Commercial Investment Mortgages

Published on October 25, 2016

Whether you are an experienced investor with a large portfolio or an investor with a single commercial property, since 2008 it has become increasingly difficult to find a lender who is able or willing to offer mortgages for commercial investment properties.

 

According to a Savills report in 2014, there was about £200 billion of outstanding commercial real  estate debt in the UK and approximately 25% of that was in sub £5m loans and 14% in £5-20m loans. At the height of the market in 2007, there were about 65 to 70 banks, building societies and financial institutions servicing that market sector. In 2016, there are roughly 11 banks willing to write a sub £5m commercial investment property mortgage.

 

Shockingly, due to the attractiveness of commercial real estate debt as a fixed income asset class, there are over three times as many lenders willing to write a £100m plus loan than a sub £5m loan.

 

Proplend caters for the property investor looking for a sub £5m commercial investment mortgage or commercial re-mortgage on properties throughout England and Wales.

 

Unlike many banks, our commercial mortgages are not off the shelf products, each mortgage is tailored to meet the specific needs of the investor and the property.

 

Commercial mortgages are available for up to 75% of the investment value or the purchase price, whichever is the lower. The loan to value of the mortgage will be ultimately be determined by the amount of income the property generates from the tenant leases. We will consider shorter term commercial bridge loans on a case by case basis.

 

We offer commercial mortgage loans on a broad range of properties, including:

  • Offices
  • Industrial units
  • Modern factories and warehouses
  • Retail
  • Mixed use
  • Healthcare
  • Leisure

 

Who do we offer commercial mortgage loans to:

  • Limited Companies
  • Limited Liability Partnerships (LLPs)

 

What is a Commercial Investment Mortgage ?

The biggest difference with other type of mortgages such as a residential mortgage, is the type of property for which funding is required; in this case it would be an office, industrial unit or a shop for business use. The property will be an investment rather than owner occupier, where tenants pay rent you use, in turn, to pay the mortgage.

The standard process is that an application is submitted by the borrower, we meet with the borrower and view the property, the property is valued and if approved, a commercial mortgage offer is issued. Following the satisfaction of the property legals the transaction is completed.

 

What information will I be required to provide in order to apply for a commercial mortgage?
In order to process an application, the borrower needs to provide the following information – the better quality the information, the quicker we can process the mortgage application

  • We will collect information (financial and credit) on the borrower (Ltd Co or LLP) and the underlying directors and shareholders
  • We require information about the property (including having it valued)
  • We require a copy of the tenancy schedule, the tenancy agreements and the cash flow to ensure that the borrower can afford the interest payments due on the commercial mortgage
  • We need to understand the business plan for the loan and importantly how and when the mortgage will be redeemed

 

If you have a requirement for a commercial mortgage or a commercial bridge for the purchase or refinance of a commercial investment property, please contact make an Enquiry or contact us on 02033978290.