November 2015 - First 4 Commercial

What is a commercial mortgage and who can apply?

A commercial mortgage is used for any property purchase that is not for your sole residential use. Due to the fact that every premises is different, each application is individually processed, assessed and the rate of interest will reflect the risk value of the acquisition.
When would you look at taking out a commercial mortgage? Commercial loans tend to take over once a business loan hits £25,000. Generally anything up to that amount is unsecured, after that a lender will need greater security to offset any risk. It is considered uneconomic to take out a commercial mortgage under £50,000 due to the legal and administrative costs involved. Some lenders have minimum amounts that they will lend.
Using a specialist mortgage broker is essential for this type of loan. They will understand every single intricacy involved, and will research and advise on the best loan type for your circumstances. Security is important, so the lender will take a percentage of the property being purchased as collateral. How much will depend on the provider used. A deposit will also be required for the remainder of the value of the loan. If a cash deposit is not possible then security can be taken on a property that has a large amount of equity in it, or a charge put on other assets or shares.
Commercial mortgages can span a 25 year period however short term finance is available. According to money supermarket a typical rate will be quoted as “X% over base or LIBOR”. The lender will vary the rate of interest according to how ‘risky’ the loan is. It goes without saying that a large loan with a low risk will get a better interest rate. Arrangement and valuation also apply and are normally a percentage of the loan amount.
Using the right broker is essential. We have many years’ experience, have the right contacts and know the market so we will make sure you get the best deal. The codes of practice that they are legally obliged to follow mean that you will always get the best possible quality of service.


The Benefits Of Bridging Loans As A Short Term Funding Option.

Bridging loans are an extremely useful short term funding choice, they literally ‘bridge’ the gap. If you are waiting for a debt to be paid or other money to come to fruition such as a mortgage or any financial transaction to do with a property, then this form of loan can be a convenient option as a short term measure. Due to the fact that this form of loan can be more costly than a high street alternative, then it should only be considered as a quick stop gap.
So how does a bridging loan work?
• Quite simply this form of money lending is primarily used for property acquisitions, either for buy to let, investment or development. These loans work well for property developers and landlords who wish to turn property purchases, renovations and sales around rapidly.
• If you are waiting for your home to be sold and wish to complete on another property then short term access to money may be required.
• This type of loan works well for buying a property at auction too. Tempting as they are, rates of interest can be high and administration and legal fees apply on top too, so finding a reputable lender, like us, is paramount.
• Recently there has been a surge in bridging loans for those people who have been waiting longer for their application to be processed at a high street or private bank.
• Always think about your exit strategy from the loan, consider getting a mainstream mortgage or a buy to let mortgage, which may take longer to apply for, but will provide you with the funds to pay off the bridging loan sooner.
• Bridging loans should not be looked at as an alternative to mainstream lending, they should be thought of as a convenient means to an end.

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