Commercial Mortgage rates

[Gettingthereslowly]

Looking to borrow some money to fund a commercial Buy To Let.

Existing high street bank has offered:

Me: 30% deposit
Bank lend: 70%

1.99% arrangement fee
Base rate + 3.85% tracker
10 to 15 yr term

Do these fees/rate seem reasonable?

(last time I borrowed money I paid 1% arrangement and base +3.3%; but that was pre-covid/a while back)

To be clear - this is not for own occupation - this would be to buy a commercial premises, and (hopefully) rent it out to another business/tenant. Total purchase price circa £300k.

 

[Mark T Jones]

Ultimately the rare will be down to the underlying credit - without that detail it's hard to say

It's certainly in the right ballpark

 

[Gettingthereslowly]

Thanks Mark. My main bank said my rating was 'A (something-forgot the rest of it)'.....adviser said it was the equivalent of 999 personal score.

Whilst I've been with the same bank for 32yrs, they don't give me a named 'business relationship' type person......so every time I do phone up, I get a call centre/speak to different advisers.

Are any of the fee's/rate negotiable?
Is it worth going to a broker (last time I did this a few years ago, the broker admitted that they would not be able to beat a main high street lender......they were more used to dealing with clients who had already struggled to get finance from the high street)

 

[Mark T Jones]

A good broker will tell you up front whether they can get better terms. Unfortunately there are a lot of shabby ones who either don't know or who will grab your fee before telling you.

@Gordon - Commercial Finance is more tuned into this market than I am as a broad rule I'd say that if your bank want the business, they will price it to win it

 

[tony84]

Rates/fees are only really negotiable if you are buying something for a lot of money.

Anything less than a million I think it will be a case of these are our rates - take it or leave it.

Those rates do not seem too bad, although commercial is not really my bag. Would it not be worth speaking to a broker and seeing what they can do?

With a broker you also have a named person - you only speak to your broker and they do the running around for you. I know we have our own named contacts with most lenders.

 

[Gordon - Commercial Finance]

Looking to borrow some money to fund a commercial Buy To Let.

Existing high street bank has offered:

Me: 30% deposit
Bank lend: 70%

1.99% arrangement fee
Base rate + 3.85% tracker
10 to 15 yr term

Do these fees/rate seem reasonable?

(last time I borrowed money I paid 1% arrangement and base +3.3%; but that was pre-covid/a while back)

To be clear - this is not for own occupation - this would be to buy a commercial premises, and (hopefully) rent it out to another business/tenant. Total purchase price circa £300k.

These are pretty reasonable rates right now yes. Rates have taken a bit of a leap up since the start of this year from rock bottom to slightly above rock bottom.

You could still shop around of course and you will get a different balance between rates and arrangement fees. Everything will work out similar in terms of total cost but you might find a better fit for your precise situation.

 

[BubbaWY]

Looking to borrow some money to fund a commercial Buy To Let.

Existing high street bank has offered:

Me: 30% deposit
Bank lend: 70%

1.99% arrangement fee
Base rate + 3.85% tracker
10 to 15 yr term

Do these fees/rate seem reasonable?

(last time I borrowed money I paid 1% arrangement and base +3.3%; but that was pre-covid/a while back)

To be clear - this is not for own occupation - this would be to buy a commercial premises, and (hopefully) rent it out to another business/tenant. Total purchase price circa £300k.

Out of interest, do you have to personally guarantee the mortgage?

 

[Gettingthereslowly]

Thanks for the various replies.

Will try and find a local broker/see what they can come up with........but ultimately don't want to waste their time.

No, I dont have to give personal guarantee for the new mortgage - but they want to know all pesonal assets/commitments. I have a fair chunk of equity in the orignal ltd company (who banks with them), so they can see long track record/trading history.

 

[Chris Ashdown]

In the near future it's likely that the bank rate will go up to counteract inflation, so I suggest you don't hang around to long