Tips when applying for a commercial mortgage
Last updated at 10:32, Thursday, 17 May 2012
THE number of lenders providing commercial mortgages has decreased over the past five years.
However, it is still possible to secure a commercial mortgage with lenders looking for low risk, good quality loans, from applicants who are able demonstrate they have the skills to be successful and can comfortably service the borrowing.
Lenders will typically provide loans of up to 60 per cent of the market value of the business premises.
In addition to the deposit, purchasers will be required to budget for set-up costs, including the lender’s arrangement fee, valuation and solicitor’s fees, including Stamp Duty Land Tax.
Lenders will typically lend on freehold or long leasehold premises. Interest rates and the term of the loan will vary according to the proposition and will reflect the lender’s assessment of the risk.
The lender will also take into account the income being generated against loan commitments and the deposit made.
When approaching a lender for a loan, it is important that you are prepared and that you are able to clearly put forward what you are looking to purchase, what loan you require and the income that will be available to service the loan.
It is important that purchasers produce a solid business plan describing the business premises, the short / medium / long term objectives of the business, marketing and advertising plans and the last three years’ accounts / income figures together with financial projections with the assumptions used.
You will also need to be able to demonstrate how your business can deal with unexpected shocks and how resilient it is to such events.
It is also important, especially if approaching a lender who has no knowledge of you, to produce a detailed CV to show your background, skills and experience relevant to the business.
The business plan should also include your current financial position showing a detailed asset and liability statement, details of all existing properties and savings together with all loans outstanding.
The business plan should be looked on as an opportunity to show the lender that you have thoroughly researched, considered and understand the venture and that you will be a good prospect to lend money to.
In summary, there are lenders still providing commercial mortgages. However, lenders will generally now require a much larger deposit than in previous years and purchasers must clearly demonstrate that they have the necessary business skills to be successful in the venture.
Lenders want to ensure that the proposed loan can be serviced now and also in the future by considering the ‘what if’ factors.
The Cumberland Building Society has an experienced business team who offer commercial mortgages, business current accounts and business savings accounts.
Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
First published at 13:26, Wednesday, 16 May 2012
Published by http://www.nwemail.co.uk
More Grange news
- Cumbria sex offender pensioner due in court today charged with loitering near children's play area
- Cumbria fly-tipper admits dumping his old sofa
- High winds close outdoor exhibition in South Cumbria
- Cartmel Races - Betfair Barbecue Day 2014
- Cartmel Races - Totepool Cumbria Crystal Hurdle Day 2014
- Two race horses perish at Cartmel races in South Cumbria (16 comments)
- Consultation begins on £1.4m South Cumbria homes proposal (1 comment)
- Cartmel Vintage Race Night
- Barrow bakery has recipe for success
- Car stolen in South Cumbria
- Barrow and Grange venues for summer street gallery exhibition
- Cumbria chef Simon Rogan wins another accolade
- Concerns over application for 68 new homes in Cumbria town
- Grange care home residents given month to leave (2 comments)
- Police appeal after Cumbria collision between car and pedestrian
- Work on multi-million housing development in South Cumbria under way
- Cumbria women invited to Dalton, Grange and Ambleside events to "change their lives"
- Look for elusive bird in Cumbria
- Supporters prepare South Cumbria lido Lottery cash bid (1 comment)
- Social media crimes in Cumbria on the increase
- Bizarre theft of Slimming World banner in Cumbria
- Cumbria businesswoman helps brave servicemen and women unwind
- UPDATE 2pm: 70 properties in Cumbria still without power
- Search is on to find a poster girl to be the face of Grange Lido campaign
- Heavy rain set to hit Cumbria today
Evening Mail homepage
ENERGY FOR LIFE 5.1k WALNEY FAMILY FUN RUN
Did you enjoy the Energy For Life 5.1k Walney Family Fun Run?
• Click here to pledge to take part in next year's event on September 2, 2012
World's biggest coffee morning 2014
WCF pet and equestrian
Choosing a pre school
Come and join us 5