Commercial mortgage

[Wattie the barber]

Hi everyone, I'm new here and stumble across the forum and thought I would ask for advice do any would be appreciated.
I have been leasing a shop for the last 12 years and the landlord has approached me to ask if I want to purchase the property. I feel this is an oppurtunity I can't let pass me by.
I am reading that commercial mortgages require a very large deposit, I don't have cash sitting or a lot of equity in my home either.
I don't think I would have a problem getting a 70% mortgage given I have a remarkable credit history and an business account that has been run as well as it could be. I have never missed any payments in my 12 yrs of trading, from rent to utility bills and my account also has a healthy balance (but not 70% of a valuation)
I am currently paying around £600 a month in rent and would be able to pay a bit more than this in mortgage payments if required.
My question is, has anyone ever been in this position and the bank lends them the deposit money in the way of a loan then a mortgage for the rest? I can't let this oppurtunity pass me as I won't get this chance again if the landlord sells to another.
It's simple for the bank to see that it's relatively safe for them to give me the money to enable me to buy the shop I've been trading in for the last 12 yrs successfully.

Are banks really willing to help folk in my position.

I have only been approached today by the landlord out of the blue so I have no time to save save save for the deposit.

 

[BenJacobs]

Hi Wattie,

Unfortunately I would strongly doubt that banks would lend you (a) the deposit then (b) the principal to purchase the commercial property with. It is far too much risk for them to take on (100% risk on their side - 0% risk on yours). There aren't any real work-arounds in terms of getting the deposit from one bank (Bank "A") and then the rest of the mortgage from another (Bank "B") as Bank A would want to know what the money is being used for (and they would not like it being used as a deposit for a commercial mortgage) and Bank B would then increase their risk because they would factor in this brand new loan you have just taken on.

Do you know how much equity the landlord has in the property? There could be a work-around there. Say for example the property is worth £300,000 and he has £50,000 equity in the property, you could take a long-term option to purchase it and just buy his equity out now. That would mean (a) he gets to sell, (b) you get to purchase and (c) he releases all of the equity in his property (which I'm sure is the main aim of why he wants to sell in the first place). You would then assume responsibility for the mortgage finance currently in place, so wouldn't have to raise a mortgage at this point in time, and can save for the future when you do buy it out completely.

The above is over-simplified, and would depend strongly on (a) how much money he has in equity and (b) if you could then raise that money in the form of a loan. If you can find that out, and get the loan (sounds like you have a long trading history and excellent credit - which goes in your favour) then you could do a deal with him quite quickly.

 

[Homer J Simpson]

Maybe @tony84 can help ? Not sure if he does commercial mortgages or not

 

[tony84]

Not really one for me, I dont really do commercial.

But unless you have a deposit your not going to get a commercial mortgage.
You may be able to do a secured loan for the deposit though - although not all secured loan companies will allow you to borrow for business purposes. You will need something to secure it against.

 

[PinnacleCredit]

It is unlikely you will be able to secure both the deposit and the commercial mortgage for the purchase, from banks, as explained above there are obvious issues. One key concern that banks would have would also be affordability. If you take on a loan as well as a commercial mortgage, ( although its not stated what amount it is) i would have thought that you may well be well in excess of the £600/m you are currently paying. One potential option, which i seem to be mentioning on this forum quite a bit recently is crowdfunding / peer to peer lending. Potentially to obtain the deposit or possibly all of your requirement, although much more detail would be required to review if its an option.

PM me if you would like to discuss further

 

[PaulThompson]

As the leading broker in the UK for this type of purchase (Award winners in 2013 and 2014) we have a variety of means to help in this sort of situation, firstly, we have lenders who will potentially go to 90% of purchase price, we then have a variety of other funders who might help with the deposit.
I'll PM you the details and look forward to toasting your success!

 

[BenJacobs]

Paul - are you really saying that you have a lender that will lend 90% of purchase price on a commercial property, and on top of that, another funder who may help with the deposit? ...Really??

 

[PaulThompson]

Paul - are you really saying that you have a lender that will lend 90% of purchase price on a commercial property, and on top of that, another funder who may help with the deposit? ...Really??

Really!
We started doing this sort of case about 12 years ago!
We've actually funded some clients up to 110% of purchase price.

 

[BenJacobs]

Currently having a good look through your website... we need to talk ;-)

 

[Ian J]

As the leading broker in the UK for this type of purchase (Award winners in 2013 and 2014)

I see that your 2014 award was from Acquisition International. I wrote a blog piece about these awards here after I had received an email telling me that a non existent company name that I made up had been nominated for an award

 

[PaulThompson]

Wasn't aware of that Ian - I produced an entry etc for them just as I had with the Business Moneyfacts Awards last year (which you can't argue with) - will take it off my signature!
(#Gutted!)

 

[JMaddox]

Although Peer to Peer lending is quite interesting, it's also pretty risky! I've known people to go with a slightly unheard of brokerage and ended up basically giving their money away. If you can do it properly though, it's an exciting prospect!

Read this nice article about the pros and cons of P2P here, check it out!

 

[businessfunding]

Although Peer to Peer lending is quite interesting, it's also pretty risky! I've known people to go with a slightly unheard of brokerage and ended up basically giving their money away. If you can do it properly though, it's an exciting prospect!

Read this nice article about the pros and cons of P2P here, check it out!

That article is about peer to peer currency broking?

Peer to peer is a pretty generic term covering a range of products.

Meanwhile, back at the OP - your key issue is going to be about affordability - I don't do commercial mortgages and don't know the figures involved but in reality with a high risk top slice of borrowing I'm guessing it will e tight

Paul is far more experienced than I, but in honest I would be surprised and appalled if LTV more than 90% was available in today's market.

 

[PaulThompson]

I would be surprised and appalled if LTV more than 90% was available in today's market.

Me too - except in exceptional circumstances (for instance we arrange 90% + funding for sitting tenants buying their freeholds)
Otherwise there are no deals this high, only by use of additional security or another lender.

 

[PaulThompson]

To get back to the OP - Wattie - YES - as above, 90% funding from a main lender is possible, depending on the overall numbers - if we can then find the 10% somewhere else then we're all happy - and, again, depending primarily on affordability there are some options
Can you give me a call and we'll talk thru the specifics?

 

[PaulThompson]

Ooops - it's an old thread!!