Mortgages for small businesses

LLman

In July 2004 my partner and I decided open a hitherto disused shop which was in the ground floor of our house. We contacted our Business Bank Manager at Nat West who informed us that we would need a Commercial Mortgage (our mortgage company GMAC could not provide a commercial mortgage). It took our Business manager 9 months to organise the new repayment mortgage, and they (Nat West) charged us in the region of £1200 to organise this! Our mortgage - £90K on our home, jumped from £450 pcm to £750 pcm at today's rate.

We have since been told by several people that the best advice would have been to separate the shop from the house for finance purposes with a lease. That way we could reduce our monthly payments to around £350 ish. I contacted our newly-assigned Nat West Business manager in January and on several occasions since, but heard nothing. Today I finally managed to get through to our business manager, who said he had written to us. We have never received such a letter, and he has not chased this up. Nat West do not apparently use email!

Is the advice we received correct, and the charges fair, or could we have been given better advice if the manager was more switched on about the subject. Is the £1200 set up fee justified?

toonfish

the fee is standard, but personally I would have split the titles as you have already been advised. You could then have kept the house at residential rates. Some lenders would possibly have done it all on a residential basis anyway, depending on the size and use of the shop.