Commercial Mortgage Enquiry-When and how to approach broker

Toni_Hayes · 5 October 2017 at 1:30PM

Hello,
So for various reasons, despite no experience in the industry, I/we would like to buy a new home with additional property on site that could be used as a holiday let(s).

I have been reading up about it and understand about the usual 30% deposit (don't have), unless you have another property that can be used for security (could have - partners current house). I understand that they do a proper valuation on the property to help decide how much to lend, and that some lenders look at your earnings as well (two salaries of £39k each), but that they often want rental to cover 125% of the repayments (need to look at that again, or have I understood that correctly).

I understand that I would need a commercial/semi-commercial mortgage (though I have seen some people say that that last one does not exist), and that it would need to be regulated if the personal accommodation is over 40%.

Basically I have been trying to do my homework as I am yet another fantasist with no idea on where to start etc etc, but I have no clue about how to go about finding out what I may be able to borrow in different circumstances. I thought a broker would be best, but do I just go to any broker, does it help if they are local? I know some are online. Also how do I avoid getting laughed at, to show I am serious. What info might they want or things do I need to consider that may not be obvious.I am taking other little steps to show my genuine interest and effort, but this post is long enough already.

Thanks

ACG · 5 October 2017 at 2:30PM

I have never done a lot in the commercial world so I am far from the best person to answer. However, I can not see a commercial lender taking a charge (first or second) over a residential property in lieu or the required deposit.

Call a broker and just explain you are at the early stages and looking for some guidance on what is needed. I get quirky enquiries all the time, some you can tell are from time wasters, others you can see people are quite serious - even if it does not quite pan out.

You may find some brokers try to get you off the phone asap, but another may spend some time trying to help you.

amnblog · 5 October 2017 at 3:30PM

Not sure where this is going if you don't have a sizeable deposit.

How much is the property?

Toni_Hayes · 9 October 2017 at 11:53AM

I have not selected a property (assuming you are asking about the business property amnblog) as I don’t know what price range is realistic. I want to get an idea of what is feasible first. I assume this is the sensible order of things rather than selecting a property with no ‘mortgage-in-principle’.

I have read in several places about the security on another property in-lieu of a large deposit (although it does not state what the definition of “sizeable equity” is). I'm not allowed to post the links but one comes from a broker and one from moneysupermarket.

I would have a small deposit (20-35K) but I know this is not really enough. But I do not want to have to wait for family members to kick the bucket before I have a massive pot of cash to do this, but am too old to do it.

Do all people who start up have massive amounts of money for deposits? Are there no alternatives?

ACG · 9 October 2017 at 12:04PM

Rent a property rather than buy?
Find investors and split the investment/profits.
Find business partners and split the investment/profits and workload.

You could raise a secured loan against your current property to help fund the deposit.

There is usually more than one way to skin the proverbial cat.

Commercial Mortgage Enquiry-When and how to approach broker

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