Cost of a Commercial Mortgage – Rate Of Interest Payable
Borrowers can expect to pay between 2 and 4 percent above Bank of England Base Rate for a mortgage term of between 5 and 30 years. The exact rate of interest payable and length of mortgage term will be determined by the lender’s assessment of the borrower’s financial situation and ability to repay the loan.
For a business that is currently trading, some mortgage lenders will only make allowance in their calculations for the value of the land and buildings for which the mortgage is required. Other lenders will take into account the total value of the business when deciding upon the sum that they are willing to lend.
Information Required by Potential Lenders
A commercial mortgage provider will require information about the following, before deciding whether to make a mortgage offer to the applicant:
- Trading accounts for the previous 2 years for an existing business, or projections of income for a new business
- Amount being invested from own resources
- Building and land survey
- Physical location of the property
- Potential legal issues such as right of access to the property
- Potential environmental problems that could affect the property
- Relevant business expertise and experience available within the enterprise
- Whether the applicant has any adverse credit history
Commercial Mortgage Availability
Commercial mortgages are available from specialist lenders and high street banks for the purchase of a range of commercial properties. Consulting a reputable mortgage broker such as Access Commercial Ltd can often be beneficial when trying to find the appropriate commercial mortgage for your business venture.
Because financial institutions use different criteria when dealing with commercial mortgage applications, borrowers should consider applying to several mortgage providers in order to increase their chances of receiving an appropriate mortgage offer and because Access Commercial Ltd deals with a wide range of lenders we make sure your application gets the highest chance of success..
Finally, it is always worth remembering that a well prepared business plan will go a long way towards convincing a lender that your mortgage proposition is viable.
Commercial mortgages are available from high street banks and specialist lenders
- The rate of interest payable and length of mortgage term will be determined by the lender’s assessment of a borrower’s financial status
- Borrowers should consider applying to several lenders to improve their chances of obtaining a commercial mortgage.