Commercial mortgage options ?

[Talay]

I received an unexpected telephone call at the weekend from one of my landlord's children informing me that not only were they seeking to sell the property but that they had also received an offer, though they had not accepted it.

It smacks me of an aged parent looking to liquidate a long held asset and a few cash poor children wanting some shopping vouchers sooner rather than later.

The property is a ground floor shop, flat above and an outbuilding or two. Mathematically, the numbers stack up but coming out of the blue, we were not expecting to have to finance a building with such short notice.

Ideally, we'd like to put down as little cash as possible and use cashflow from that business to renovate. However, I'm not sure what deposits we might need for a commercial mortgage for an owner occupier (One of my Ltds has a lease on ground floor etc.).

Ballpark valuations are around £300k for all parts, not just the shop.

What can we reasonably expect to get away with if we try to put a finance deal together in terms of deposits and interest rates ?

 

[STDFR33]

30% Mark I would imagine.

@tony84 might be able to help.

 

[Gordon - Commercial Finance]

30% is about right @STDFR33

All of the reputable bridging lenders will go up to a max of about 75% LTV, however in calculating that LTV they include interest and fees, so 30% deposit is generally the starting point. If you were able to get the property below market value it might be different, but by the sounds of it that would not be the case here.

 

[KM-Tiger]

I've always used a broker for commercial mortgages. They seem to have access to people at the lenders that you couldn't ordinarily get to meet.

 

[tony84]

30% Mark I would imagine.

@tony84 might be able to help.

Commercial is not really my bag, I would have said 30% also but I would have tagged @Gordon - Commercial Finance who has already replied as he will know better than I will.

 

[Mark T Jones]

A good broker can add lots if value.

Use one who really understands the market, like @Gordon - Commercial Finance , rather than a generic ‘we do everything ‘ brokerage.

 

[Dave Fitzgibbon]

HI Talay. I can vouch for using a broker as already mentioned they have access to a wider range of lenders and can help source the most fit for purpose solution. We specialise in commercial mortgages here at RLA Capital. If you would like to discuss your options please feel free to get in touch.

 

[STDFR33]

HI Talay. I can vouch for using a broker as already mentioned they have access to a wider range of lenders and can help source the most fit for purpose solution. We specialise in commercial mortgages here at RLA Capital. If you would like to discuss your options please feel free to get in touch.

Subtle.

 

[PaulThompson]

Hi Talay
Speak to a number of brokers before you commit, you don't always get what you pay for so make sure the broker understands what you need before you jump with them!
We've just completed a purchase for a customer, very similar to your situation, landlord unexpectedly offered the freehold - unfortunately they had no cash as every bit of spare profit had gone back into the business
With a lot of work we were able to fund 100% of the purchase price of the premises and almost all the purchase costs, the clients were able to cover some from cash-flow but that was it.
Would be very happy to give you a free hours consultation next week if you'd like to discuss your options.

 

[Neil Lukins]

30% deposit is the norm for a Commercial Mortgage.
We've not seen many lenders go higher than this for a long time.
Based on a £300,000 valuation you would require a £90,000 deposit.
Rates can vary from lender to lender and is all dependent on your circumstances - we've just done a couple of commercial mortgages at 4.75% and 5.75% over base rate.

As mentioned above there are possibilities of getting the whole funding but this may require refinancing of other assets and a very good credit rating.

Happy to help.
Neil.