A commercial mortgage is any loan secured on a property which is not your residence. Each premise, and the person applying for the mortgage, will be different, therefore each loan is assessed individually and priced in accordance with its risks.
The rates for commercial mortgages vary greatly. They will be dependent on the experience, track record, industry sector and the strength and performance of your business plus many other factors. If it is a new business, you’ll rely more on projections and your personal experience.
Commercial mortgages are very complex and much like residential mortgages, they are subject to fees in addition to the actual monthly repayments themselves.
The can include:
- Arrangement Fee
This will be added to the overall loan, or deducted from the loan upon completion of the deal. It is payable to the lender and is there to cover their costs of arranging the finance – and covers the cost of their work should you decline their offer. Some lenders may take part of this fee as a commitment fee which is payable with your formal application – this will be non-refundable.
- Valuation Fees
The lenders will require that the property is valued by a specialist. It is a survey of the property to establish its value and due to the more complex nature of commercial properties, these surveys are usually more expensive than residential valuations. This will be payable after an indicative offer has been accepted.
- Legal Fees
Commercial lenders have separate legal representation and you will be required to pay for your own legal fees and those of the lenders. Whilst they will be separate, sometimes money can be saved by using different partners from the same legal firm.
- Broker Fees
Due to the complexity of commercial mortgages, it is highly recommended that you use an independent broker who specialises in commercial mortgages. They will have the contacts and market knowledge to ensure you get the best deal. There is usually a fee their skills in finding you the loan, negotiating the finance and presenting your case to the lender.
If you need a commercial mortgage and would like to discuss your options with First Financial Solutions specialist team, please click here to contact them or call them us: 01639 262222