Which quick repayment mortgage?

taffiraq

Hi folks
This is my first post, and i really need your advice, as i am clueless when it comes to financial decisions. I,ll try to keep it short and sweet, so this is my position. I am currently renting an engineering workshop, which also has 2 other units within the building. I was partway to setting up a business, when i accepted a job working in Iraq, for a wage i could not refuse. When i am finished here (5years)ish i will return to engineering. Now my landlord has offered to sell to me the whole building and some land to go with it. I want to buy it, to build myown workshop on, and rent out the 3 units which would cover the cost of my current mortgage. I am looking to borrow 200k, and i can afford to repay 4k a month. Can anyone tell me what are my best options and what mortgage i should get?

Reguards

Kevin

homer_j_3

Because it is an commercial entity you will need to go down the commercial mortgage route. You will often need to put a deposit down (15% ideally) or have some form of security to do this. You MAY also need a business plan and demonstration of how you can repay this loan back etc.

You will probably better speaking to a broker that deals in commercial mortgages.

taffiraq

Thanks for the quick reply Homer
What if i said i wanted to convert the building to a bungalow to rent out?

homer_j_3

a lender would look at what security their money had and you would probably need planning permission or change of use permission. A residential lender would not secure against commercial property.

Do you have a deposit?

taffiraq

yes, i will have approx 10k come december, I have options with what to do with the building, could even buy it purely as an investment. Theres an identical building next door to mine with less land, hes put 200k into it (cost of building and conversion) and has had it valued at 340k. Im hopeing to buy it sooner than later, i know its not going on the market, as he only wants to sell it to me.

taffiraq

The building is an old milking shed, on a dis-used farm, it once had permission for a granny flat, but its currently used as engineering units, if that helps?

homer_j_3

I would imagine this will be complex and not something that will be done through a residential mortgage. You would have to probably apply for a business loan or get development finance.

This would require you to set out exactly what you want to do with the property, what it will cost you to do what you want to do and what income you are going to drive from it. If you have income to be used that is acceptable, this will also support your plan.

What you have to realise is that anybody that will invest in your plan will want to be satisfied that

- you can afford to repay it back
- the security will mean that whoever investst can get their money back
- their will be the income to sustain it through rentals etc..
- you have something to lose from this if it doesnt work.

So if your income doesnt stack, your income projections inaccurate, you need more than the unit is worth and/or you have not sacrificed anything into the deal then you will not get far

taffiraq

Thanks homer
That makes sense, ive just noticed your in Lancashire, so am i! (when im home) the building is in south preston, are you anywhere near?