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You Need a Commercial Mortgage But Lack Commercial Experience? Here’s What You Need to Know

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If you’re a residential landlord looking to invest in a mixed-use or semi-commercial property, you may be wondering what it takes to secure lending. While these types of properties offer higher yields and lower stamp duty, there are certain things you should keep in mind when it comes to financing your commercial investment.

In this article, we’ll provide you with the information you need to increase your chances of securing finance for your commercial property. From understanding the types of commercial mortgages available to knowing what costs are involved, we’ll cover everything you need to know to make your investment a success.

Key Takeaways

  • Understanding the types of commercial mortgages available can help you secure financing for your commercial investment.
  • Tenanted properties may be more attractive to lenders, but it’s not always necessary to have a tenant in place.
  • Be prepared for the costs involved in securing a commercial mortgage, including legal fees and valuation costs.

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Secure Commercial Mortgage with No Previous Experience

Securing lending for commercial properties can be a challenging task, especially for those who lack experience in running mixed-use or commercial properties. However, everyone deserves an opportunity to get on the ladder, and there are ways to increase your chances of securing the lending you require.

We are whole of market brokers, and we are 100% independent. Our experts carefully assess your circumstances to ensure that you get the best deal possible.

If you’re looking to secure lending for your commercial property, give us a call today.

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It is generally preferred by lenders to have tenants in your commercial property, and having at least 2 years left on a standard FRI lease is also beneficial. However, in the case of vacant units, lenders may offer up to 60% LTV on a 180-day valuation. This means that lenders will base their opinion of the property’s value on what the sale price would be if the property were to be sold quickly, typically within six months.

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Costs Involved?

When it comes to commercial mortgages, the rates are priced individually based on the strength of the proposal. The interest rates are dependent on various factors such as industry sector experience, the property itself, the quality of the tenant, and the length of the lease. High-street lenders are offering rates ranging from 2% to 5% over the base rate on capital and repayment terms only. Additionally, expect to pay 1-2% in arrangement fees.

Other costs involved in commercial mortgages include valuation fees, deposit requirements, and stamp duty. Valuation fees are necessary to determine the property’s value and are usually paid by the borrower. The deposit required for a commercial mortgage is usually higher than that of a residential mortgage. Stamp duty is also applicable to commercial properties, and the rates vary depending on the property’s value.

Legal costs are also involved in commercial mortgages, and they vary depending on the complexity of the transaction. The legal fees are usually paid by the borrower.

In summary, commercial mortgages are priced individually based on several factors, and the rates can vary significantly. Additional costs involved include arrangement fees, valuation fees, deposit requirements, stamp duty, and legal costs.

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Frequently Asked Questions

What are the requirements for obtaining a commercial mortgage as a first-time buyer?

If you are a first-time buyer, you will need to provide a detailed business plan that outlines your business’s potential for success. You will also need to have a good credit score and a sizeable deposit saved up to show lenders that you are a low-risk borrower.

How do you find the best commercial mortgage rates in the UK?

To find the best commercial mortgage rates in the UK, you should compare rates from different lenders. You can do this by using online comparison tools or by working with a commercial mortgage broker. It is also important to consider the fees and charges associated with each mortgage to get a clear picture of the overall cost.

What are some reputable commercial mortgage lenders in the UK?

Some reputable commercial mortgage lenders in the UK include some of the High street lenders as well as some specialist lenders. However, there are many other lenders to choose from, so it is important to do your research and compare rates and terms from multiple lenders before making a decision. A Commercial mortgage broker can help you to find the most suitable mortgage for you. 

Can a new business with no commercial experience obtain a commercial mortgage?

Yes, it is possible for a new business with no commercial experience to obtain a commercial mortgage. However, it may be more difficult to secure a mortgage without a proven track record of success. In this case, you may need to provide a detailed business plan and demonstrate your ability to repay the loan. For SPV companies the application process can be be more straight forward.

What is the typical timeline for obtaining a commercial mortgage in the UK?

The timeline for obtaining a commercial mortgage in the UK can vary depending on the lender and the complexity of your application. In general, the process can take several weeks to several months. It is important to start the application process early and work with a lender or broker who can guide you through the process.

What are the benefits of working with a commercial mortgage broker?

Working with a commercial mortgage broker can help you find the best rates and terms for your mortgage. Brokers have access to a wide range of lenders and can help you navigate the application process. They can also provide valuable advice and support throughout the process.

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Legal Information & Disclaimer

This site is an information only site. All of our articles are written by authorised mortgage brokers for the only aim of providing great, useful, mortgage and loan related information. We intent to offer the best possible suggestions and guides however can’t always guarantee to be perfect, please use the information at your own risk. We can’t accept responsibility if things go wrong. Please contact us via our contact page if you see anything that requires changing and we will do so as soon as possible.

The articles on our site do not provide financial advice. Instead, they aim to equip you with the necessary information to attain your mortgage objectives. 

** The content provided in this page is correct at the time of writing. Mortgage and loan lender’s qualifying criteria and rules change frequently so speak to an adviser to confirm the most up to date rules and criteria. The content on the website is not specific advice to each reader, and does not constitute financial recommendations.