Commercial Mortgage

This is a loan taken out by a business to purchase its trading premises.  All types of business premises can be considered, including:

  • Shops
  • Offices
  • Large retail outlets
  • Industrial units
  • Land
  • Leisure premises

Properties are occupied by the business (borrower) which is a term know as owner occupier.

Mortgages can be for a single property, or multiple properties if the business trades from multiple locations.

Mortgages are available for refinancing or for purchasing new properties.  When refinancing, we can consider Equity Release which would provide an injection of cash into the business.

Affordability is based on the trading performance of the Company.  Profitability and cash generation are both important factors in establishing affordability.

Covid may have negatively impacted the trading performance of businesses recently.  Lenders take a longer term view of performance and can consider the year prior to Covid along with the most recent trading figures in establishing what is acceptable.

OPCO PROPCO – this is a term used to describe a situation where a business acquires its trading premises using a special purchase vehicle (SPV).  Typically this would be a separate entity/Company that has been created only for the purposes of owning the property, outside of the trading business.  This is widely accepted as the norm.

Loans are capped at 75% loan to value (LTV) however many banks will only go to 60% or 65%.  Long term interest only repayment structures are not available, however most lenders will consider a period of up to 2 years interest only at the start of a loan.

Pricing of these facilities can vary greatly, and it is often linked to the loan to value (LTV), loan amount and credit quality of the business.  Interest rates are available in the range of 2-8% per annum.  Fixed rates are available.  Arrangement fees are in the range of 0-2% of the loan amount which can be added to the facility.

Acceptable customer types include:  Sole Trader, Partnership, Limited Company (Ltd) or Limited Liability Partnership (LLP).

Completion Example

Some examples

Case Studies

Construction Client

Specialist construction client purchasing a used Piling Rig. Purchase Price £190,000 plus VAT.HP loan amount £190,000. VAT Only Deposit. 60 monthly repayments. No balloon.Facility completed

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