Commercial Mortgages

Most of us are familiar with mortgages from having one on the home that we live in, and know that it pays to do a lot of research and speak to an expert to find the best deal for you.

And so with commercial mortgages it also pays to shop around, find the best deal, and get expert advice - it would seem foolish to consider such an undertaking without professional advice! Whilst you would go to the high street for a standard mortgage, and there may be commercial mortgages available from some high street lenders, for this market many suggest that seeing a bespoke commercial mortgage broker will be worth their weight in gold, in terms of being able to know the whole market and find out good deals for you, and relevant to the sector in which your business operates too.

In terms of the length of a commercial mortgage, well, they are virtually always over 10 years and in general probably 15 years plus, and of course as you will know from all those adverts for personal mortgages about repossession and your home being at risk if you don't keep up with payments, so too with a commercial mortgage.

When you get a personal mortgage the lender needs to know your financial situation: salary and so on, as well as details about the value of the property versus the mortgage you want. Again in the commercial arena a loan to value will be applied against the size of mortgage you can get, and the financial information required will be around the business: for instance whether it makes money (is profitable) and how long it has been trading will be important to the lender, and it may be that they request fairly detailed accounts.

As the mortgage is such a long term product they also need to assure themselves that there is no particular reason that it should stop doing well in the future, and therefore you may be required to create financial projections for a number of years.

Be prepared to provide a very large amount of financial information when applying for a commercial mortgage, and take professional advice as to what will be required so that you can get it all created in good time and don't have to rush compiling all the information required.

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