Commercial Finance is split into two distinct groups:
Semi commercial – This would be shops with residential flats above.
Full commercial – This relates to all remaining commercial premises such as offices, warehouses, pubs, factories, land, certain Buy to Lets, guest houses, farms, care homes, schools, football & other sporting clubs, hotels etc.
Individual lenders tend to specialise in specific sectors and do not deal in all commercial areas, for instance a particular lender may prefer hotels and guest houses but will not lend on factories whereas other lenders may just lend on farms. Historically this long term mortgage funding would have been sourced from traditional high street lenders however their appetite has become very limited since the financial meltdown in 2007/2008, although activity is now gradually starting to improve. When the market crashed, commercial property prices took a bigger hit than residential and as a result many high street lenders lost money on commercial property and withdrew from this sector. There are now generally fewer lenders operating in the marketplace, which left many current and new commercial property owners and purchasers unable to obtain viable support and finance options.
So Called “Challenger Banks”, who usually prefer to deal through specialist intermediaries such as UK Property Finance have stepped in to help fill the void. Challenger banks are covered by the same regulatory rules as the well know high street institutions and provide clients with the same level of cover with respect to compensation however they are more likely to take a common sense view on cases and are individually underwritten as opposed to the one size fits all tick box underwriting performed by the larger and better known banks.
As with any finance options, Commercial Finance is agreed depending upon the lenders belief that the commercial property loan will be repaid without difficulties and is split in the following ways:
Owner occupation – The borrower will utilise the security property themselves so the accounts for the business will be scrutinised by the lender to ensure the client will not struggle to make the monthly repayments.
Investment – The monthly payments on the mortgage will generally be covered by the rental payments received from the tenant. The lender will carefully review the comments made by the valuing surveyor so that they are comfortable that the expected rent plus buffer will easily cover the monthly mortgage payments, that the property is in a sought after location for prospective tenants and that the condition of the property will allow immediate occupancy, should the property not already be let.
Commercial Property Loans can additionally be used for business expansion or improvements to a property or even to help with relocating the business.
It is important to note that unlike Bridging Finance, Commercial Property Finance can often be raised by using a combination of the financial success of the business combined with the bricks and mortar value of the property.
As a whole of market broker, UK Property Finance have access to virtually any deal available in the market and based on the needs and requirements of our client’s we will source and recommend only the most appropriate product.
We have strong historic working relationships with all of our lenders, so we fully understand their lending criteria and policies, and can confidently quote terms we know can be delivered and completed. Through these relationships, we can also obtain “special” terms not generally available to other brokers or members of the public.
We take on all the effort required and save our clients both time and money along the way.