Commercial Mortgage

Shed_Head_3

We have been thinking about investing in commercial premises and have found the world of commercial mortgages confusing.

We have been given the following details but I have no benchmarking data to compare against. Can anyone help in terms of the best website to visit to help compare commercial mortgages. I have already typed in our details to moneysupermarket with no response to date.

Bank base Rate +0.99% for the first 3 years, then going up to around +2%. The repayments of £80000 over 25 years at 6.49% would be £540, if it went up to 7.49% after year3 that would be £591pm.

fees will be an arrangement fee of £800 plus a valuation fee of £475 and legal fees of £376 both inc VAT. We do not charge you a broker fee.

Thanks in advance

Shed

JoeK_3

Commercial mortgage is a totally different animal to domestic.

It is far less developed in terms of comparisons sites.

The reasons for this is that you can't just take a commercial mortgage off the shelf due to individual underwriting. Each commercial inquiry will be dealt with based on it's merits and the ability to borrow will be based on a number of factors, such as:

1) Clients previous experience in the business
2) Size of deposit / loan to value relationship
3) Adverse credit history

The commercial mortgage world is far more specialized and there are less whole of market commercial mortgage brokers around as it takes a different expertise but I personally find commercial mortgage far more stimulating and satisfying than domestic.

Get yourself a good whole of market commercial mortgage broker to find you the best rates.

JoeK

AndrewSmith

The rates you have been offered are very competetive in the world of commercial finance. It is not uncommon to pay anything up to LIBOR+8% for a commercial mortgage.

If you have a deposit of 25% or more then you should be looking around the rates you have been offered.

Commercial mortgages are generally shorter term than residential, the average being 10-15 years, and are normally always on a capital and interest basis (however some non-standard lenders offer an interest only option for 3-5 years).

It can be an absolute minefield with many non-standard lenders trying to get your business.

My advice would be to go to your own bank and discuss it with the business manager there first. Even if they cannot help you they will be an invaluable source of information and guidance.

Andy

toonfish

soem of the mainstream lenders will now do interest only for term on a commercial mortgage but as already said much depends on the individual case. If you can get 1-1.5% over base with sensible fees then you won't go far wrong.

james10999

no response