Commercial mortgages are an excellent option for those who are thinking about expanding their current business. While they can be ideal for many businesses, it is a very wise idea to familiarise yourself with the basics before speaking to a potential lender.
You should first take a look at your own trading history before applying for a commercial loan, because this will have to be in good order for them to consider you as a customer. In terms of Loan-to-Value amounts, if you were looking to borrow a sum of B#200,000, you would have to have around B#100,000 saved up for your new business investment.
Another fact that is often overlooked is that the type of business that you run will have an effect on both the amount you can borrow, and the associated interest rate that you are offered. Owner occupied business like shops or offices will typically be offered a loan-to-value amount of 80%, whereas you will be looking at a maximum of 75% should you decide to lease out your units once buying them.
You should also be aware of how much equity is available when offering security to your lenders. By confusing or overestimating this amount, you can easily overstretch yourself when applying for a commercial loan. Speak to the team at first4commercial about the range of lenders available when discussing a commercial loan, because they often have preferred asset types when dealing with borrowers.
Finally, if you are buying a brand new property, remember that the fees can and usually will be higher.]]>