Commercial mortgage availability

Jaxer

I've been trying to arrange a commercial mortgage for a couple of months now, but the broker I was recommended to, seems to be struggling to come up with anything feasible. I was looking to go down the self-cert route for a consolidation/refurbishment mortgage (of £125K) on a freehold shop/flat (around 75% LTV).

After initially quoting me around Base+3%, he's now come up with a firm offer of 12.9% with a 5 year lock-in and fees of around £5K (exc. broker commission of another £2.5K). He says this is the only product on the market for self-cert commercial loans at the moment - the property is in substantial disrepair so currently not lettable, and the mortgage would go towards refurbishment and consolidation of existing credit card/loans of around £50K.

I'd appreciate feedback from any other brokers who deal in the commercial market as this wasn't what I was expecting - is the market this bad for these kinds of mortgages at the moment?

happybroker

sounds a similar deal to that I was being quoted for some one recently.

self cert is a tricky market right now in both commercial and residential. Do you really need to go down that route, discuss it in detail with your broker? I guess you are self employed, if so why not speak to the account manager at your bank? Dropping the lending below 70% may open up a few more avenues for you if you can still do what you need to.

if you do need to self cert at 75% I don't think what you are being offered is too far off the mark. Fees are always more on commercial for some reason. It's the same with mobile phone etc also isn't it?

Jaxer

I could probably go down to about 65% if this would help matters (although my broker hasn't raised this as an issue). I work through a Ltd Co so take a low salary topped up with divs. Business bank is with Abbey and personal with First Direct.

Would you know whether Abbey or HSBC are receptive to these kinds of mortgages, or alternatively suggest an alternative mainstream lender. It's reassuring to know the broker isn't spinning me a line - but he's very hard to get hold off, and things seem to be moving very slowly, so I'm considering the viability of approaching a lender directly (although I'll obviously speak to the broker before I go down that route).

happybroker

the abbey did go into commercial lending but are not the best at seeing the bigger picture in my experience. HSBC also do this kind of lending but i have very little experience of them.

If you are the sole shareholder in your limited company then you should be able show what your income is, any self respecting lender wouldn't punish you for maximising your tax situation. Even if profits are left within the company these are still there for you to draw should you want to so could go toward your available income.

Some lenders will ask your accountant to complete a certificate to confirm your income which could also be helpful.

most of the major banks are quite good at this now, Alliance & Leicester are often helpful. The commision on commercial lending is much, much higher than domestic lending as a rule so your broker should be pretty keen to get this through for you.

If you are going to go full status on your application then 75% is well within most lender's remit and the rates should be much lower than 8% over base (probably nearer or less than the brokers original guesstimate).

Ring your broker, give him chance to do the job for you if you like him. Being busy shouldn't be your problem (fair play to him in the present climate!) but I am sure if he knows you can go high street and full status he could get things sorted quickly.

Jaxer

Thats very useful to know. Thanks for the overview.

One of the issues is that much of the income drawn from the company is going to service the existing c/cards and loans which means my personal account is perpetually overdrawn - hence one of the reasons to go down the self cert route.

I'll talk to my broker again to assess the possibility of going through a normal application and see what he thinks - it would only be fair to give him a crack at earning the commission.

Thanks again.