Commercial Mortgages

[Brian McIntosh]

I'm looking for a commercial mortgage to buy an existing business and premises. I've tried calling a couple of banks and discussing things with them but they seem to have less of a clue than I have. Anyone like to explain how it works?

 

[Scottish Business Owner]

Hi Brian,

Commercial mortgages are similar in some respects to normal home mortgages. One of the biggest differences is that the interest rates tend to be higher as banks perceive them as higher risk. The other big difference is the amount the banks will lend on them which will be typically 70% so you will have to find the rest of the funds in some other way. I have seen it go as high as 80% under certain circumstances.

The climate just now isn't ideal in terms of trying to secure this type of borrowing, many of the financial institutions simply aren't lending at present. I have a few contacts that work in this area so I will email them tonight and refer them to this post so hopefully you'll have some better answers and maybe a better idea as to whether this is acheivable

 

[Brian McIntosh]

, thank you very much. I'll maybe bypass the forum next time and just call you. For what I need, I'm probably looking at a 50%-60% mortgage.

 

[Brian McIntosh]

I should have said that I called a few of the "big" banks today to see if I could get any information on commercial mortgages. Every one of them said they would get a mortgage advisor to call me back and I'm still holding my breath. Don't banks want business nowadays?

 

[Scottish Business Owner]

I think they are being very selective with what business they take but there are signs that things are starting to relax a little. I would have thought at 50-60% there would be an appetite from lenders to do this. I'm hoping one of the commercial mortgage guys will be along soon to advise better

 

[stugster]

Have you spoken to Abbey in Glasgow mate? They might be able to help!

 

[Brian McIntosh]

That's went right over my head Stu!!

 

[michael@theiba.co.uk]

At 50-60% it should not be too much of a problem, assuming you can provide sufficient evidence of income to support the repayments.

Like says many financial institutions are reluctant currently but generally they remain keen to do business. If you give me a call 07785-112640 I will put you in touch with a bank who I am sure will deliver quickly and at a competitive rate.

 

[Brian McIntosh]

Hi Michael,

sorry to sound so naive but, what if the new business is the only income? I assume that buying a profitable business and using their books to prove income would suffice?

 

[michael@theiba.co.uk]

Yes apart from the security of the bricks and mortar valuation the banks do have to consider if you can afford the monthly repayments (they call it serviceability). If you can lay your hands on the last few years accounts which show it as a profitable business with sufficient cash generated to cover repayments then this together with your realistic deposit will suffice.

 

[Needhelp]

My experience has shown that while commercial mortgages are available, where it is for a relatively small/medium sized company they will still ask for some kind of personal guarantee from a director(s).

 

[Aaron Reed]

been looking for this as well