Commercial Mortgages
A business mortgage usually lasts from three to 25 years and you can usually find a 70-75% mortgage. This is a measure of loan-to-value ratio to see how much you’re borrowing in relation to how much the property is worth. If it’s an investment then the amount you can borrow will be determined by the rental income generated by the investment, but this will not exceed 65% of the purchase price.
Key features
There are usually no fixed rates for commercial mortgages. You’ll usually pay a higher interest rate on commercial mortgages compared to regular home mortgages as these are considered higher-risk to lenders. Commercial mortgages tend to offer better interest rates than regular business loans as these require property as collateral.
The benefits of taking out a commercial mortgage
The interest on your commercial mortgage is tax-deductible. If your property increases in value, your capital could also see an increase. You’ll be able to rent out the property to generate extra income.
How to apply
kredi can help ensure you’re paired with the most suitable lender and make the application process more manageable. A commercial mortgage application works similarly to taking out a regular mortgage for your home.
Points to consider
You’ll usually still be able to apply for a commercial mortgage if you have a bad credit rating, but you’ll likely pay a high interest to make up for the risk the lenders take. Mortgages are a type of secured loan where the property is used as collateral by the lender against the loan, so if you default you’ll likely lose ownership of your real estate. Deposits for this kind of mortgage can be quite hefty, so it’s a good idea to ensure you’ll be able to pay both the deposit and the monthly repayments comfortably. A broker can often help you find the highest loan to value ratio (LTV). If you haven’t been trading for long, lenders may see this as a sign of high-risk and request personal guarantees.
Auction Property Purchases
Auction Property Finance
What is auction finance and how does it work?
If you are an investor wanting to take advantage of the benefits associated with purchasing a property at auction, you can often face barriers when it comes to raising funds including lengthy application processes and reduced lending options from high street lenders. This has caused auction buyers to rethink financial agreements and to seek alternative
methods of funding with loans offering a quick solution to the funding gap.
In effect, property auction finance is simply another definition for short-term or bridging finance but instead it is used to purchase properties at auction. Where properties are sold on a tight schedule auction finance can be arranged quickly, ensuring that it fits neatly into the fast purchasing process. Whilst this type of short-term finance has its benefits, there are other considerations to take into account before proceeding:
• Short-term bridging finance is more expensive than mainstream mortgage products
• Administration and legal fees tend to be higher for these types of arrangements
• You need to ensure you have a backup plan should your repayment strategy fail
Whilst we would recommend that you arrange your finance before you bid, this is not a necessity. However, you will still be required to pay 10% of the final selling price on the day and the remaining 90% within 28 days.
Generally, lenders will base how much you can borrow on the purchase price/guide price and typically lend up to about 70%. However, you should be aware that properties rarely sell at auction price and you may end up paying more and so need to ensure you can fund a higher amount if required.
Making it easier to prepare for your property auction
At kredi we will work closely with you to ensure you go to the auction fully prepared so you can bid with confidence assured that you have the finances in place to complete the transaction with minimum fuss. Whether a seasoned purchaser at auction of if you are considering your first purchase, get in touch with our friendly team of specialist advisers and let them help you understand the process. Give us a call on 0207 112 8896 or fill out a contact form and one of the team will call you back within 24 hours.
Bridging Finance
Bridging Loan Deals
Whilst bridging loans have traditionally been seen as a last resort because of high interest rates, they can in fact be a very flexible short-term option if you need to arrange funding quickly.
Bridging finance can be arranged in just a matter of days and typically lasts between 6 to 18 months. It is most often used to “bridge” the gap between a property sale and purchase in order to give the borrower time to arrange a traditional mortgage on the property. Bridging finance can be secured on all types of property including those that would otherwise be unacceptable for the majority of mortgage lenders.
At kredi, we are providing bridging finance brokerage services with access to specialist lenders who will look on this type of lending favourably. We can arrange a bridging loan as either part of a planned purchase or in an emergency situation for example to prevent a sale falling through at the last minute.
When to use bridging finance
There are a number of possible scenarios in which you may need a quick and flexible short-term lending solution such as:
• Preventing your sale chain from breaking down – bridges can help you to continue
with the sale chain and complete your purchase. Finance only has to be in place until the sale
of the property has completed at which time your traditional mortgage comes into play.
• Auction property – with tight timeframes for completion, bridging loans can be a
quick and flexible way of ensuring you have the finance you need in place to secure an
auction property.
• Property renovation & development – properties in poor repair, deemed unsafe, or
in need of refurbishment often struggle to be accepted by traditional mortgage lenders. A
bridging loan would allow you to complete the work and sell the property or refinance it with
a traditional mortgage once the property meets the lenders requirements.
Whilst bridging finance has its benefits, there are other considerations in addition to higher interest rates to take into account before choosing this type of finance:
• Administration and legal fees tend to be higher for these types of arrangements
• You need to ensure you have a backup plan should your planned repayment
strategy fail, for example the planned sale of your property falls through
Making it easier for you to arrange a bridging loan
Whether you are an individual looking for short-term finance or a limited company or other entity our team of qualified mortgage advisers can help you arrange bridging finance quickly and easily. Why not get in touch with us on 0207 112 8896 for further advice or complete our contact form and a member of our team will call you back with more information and advice within 24 hours.
Property Development Finance
Property Development Finance
Whether you are looking to obtain finance for a new build development, conversion, or renovation project, property development finance is a short-term lending solution that allows a developer to finance the project throughout its entirety. With typically higher set up fees than other types of commercial mortgages, these loans are normally structured to release the funds in stages. It is typical for the developer’s contribution to be utilised at the start with the lender then providing all or most of the build costs. Loan terms generally range from 3 to 24 months, depending on the length of the project, and repayments can normally be deferred until such time as the property is sold or a commercial longer term mortgage is secured after the work is completed.
kredi are perfectly placed to arrange suitable development finance for your property project. We have been working with property developers across the UK for many years and understand the complexities of a commercial development project.
What is the lending criteria for development finance?
As with all mortgages, finance, and loans, lenders will assess each application on its individual merits but as a general guide the following are typically required:
• Your project must be a commercial development.
• Planning is generally needed to secure this type of funding although bridging
finance terms are possible.
• You want the funding on a short-term basis, typically between 3 and 24 months.
• The project should be of reasonable size, normally from £250k upwards – as for
smaller amounts a refurbishment loan is likely to be more suitable.
Helping to make it easier to get your development project off the ground
From heavy refurbishments to ground-up builds we can help and support you to arrange the most suitable funding for your project. So, if you’re looking to obtain property development finance, or simply need a bit of advice, give our experienced team a call on 0207 112 8896 for more information. Alternatively, fill out a contact form and we’ll get back to you within 24 hours.
Commercial BTL
Commercial Buy-to-Let Mortgages
Commercial mortgages are designed to enable a business to purchase a new or remortgage an existing premises that will primarily be used for business purposes. The property can be used as its business premises or may be an investment whereby it is intended to let out all or some of the building. These type of funding arrangements are seen as more complex than residential or traditional buy to let ones and as such it is important to work with a mortgage broker who has experience within this market.
At kredi we have specialist advisers who understand the structure of these types of arrangements and have access to lenders with an appetite in this market. If you are looking for a commercial mortgage to purchase or remortgage your business premises our team will be happy to offer you specialist guidance and support.
How does a commercial buy to let mortgage work?
Generally requiring a deposit of approximately 25%-40% of the total property value there are a number of additional terms for a commercial buy to let mortgage which include:
• Occupancy – a lender will usually need a tenant to already occupy the property or at
least for one to be signed up and ready to move in.
• Income – like a residential buy to let a lender will base their decision on the rental
income the property will achieve. However, the lending decision will also include the
borrower’s net asset position and experience of owning and letting commercial property.
• Tenancy – lenders will look at the business that will occupy the property and the
tenancy agreement that is in place, on average a lease of 10 years or more.
Making it easier for you to purchase your commercial buy to let property
At kredi we have secured commercial buy to let mortgages across a wide range of properties including:
• Commercial units with a residential flat above
• Offices and retail premises
• Industrial units, factories, and warehouses
• Licensed houses of multiple occupation (HMO)
Give our team of commercial specialists a call for some expert advice on 0207 112 8896 or complete our contact form and we will respond within 24 hours.