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Large Commercial Mortgages: Financing Solutions for Big Business Investments

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If you’re looking to secure a large commercial mortgage, it’s important to have a good understanding of what it entails. With years of experience in arranging commercial mortgages,  we are well-equipped to provide you with the background information you need to get started.

In this article, we’ll cover the key product features of large commercial mortgages, the costs involved, how much you can borrow, where to get a large commercial mortgage, who is eligible, and frequently asked questions. By the end of this article, you’ll have a comprehensive understanding of what it takes to secure a large commercial mortgage.

Everything About Large Commercial Mortgages

Large Commercial Mortgage

A large commercial mortgage is a type of loan that is secured against commercial property, whether it is occupied by the borrower’s own business or let to a third party. Typically, a mortgage is considered large when it is over £1,000,000. If the property will be occupied by the borrower’s own business, the product would be a type of business mortgage. If the commercial property will be let to a third party, the product would be a type of commercial investment mortgage. Large loans can be offered for both commercial and semi-commercial mortgage applications.

This is How They Work

These loans can be arranged on a capital repayment or interest-only basis and are secured by way of the first legal charge over a property. In some instances, they can be secured over more than one property. They are usually paid monthly, much like a residential mortgage. However, other payment structures are possible, such as quarterly or even seasonal payments.

Application Completion Period?

On average, a large commercial mortgage application can take between 6 to 12 weeks to complete. The exact timescale for completion will depend on the complexity of the application. During the first phone conversation, our team of advisors will usually be able to give you a guide based on your circumstances.

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Key Product Features for Large Commercial Mortgages

Features

  • Maximum Loan-to-Value (LTV) of up to 75%
  • Interest rates starting from 2.25% above the base rate
  • Repayment type options include capital repayment, interest-only, or part and part
  • Loan term of 5-30 years
  • Interest type options include fixed or variable
  • Acceptable security includes any commercial or semi-commercial property, with land accepted on a case-by-case basis

Commercial Mortgage Criteria

  • Loans available from £1,000,000 with no maximum loan size
  • Available to individuals, partnerships, LLPs, Ltd companies, offshore companies, foreign nationals, and pension funds
  • Minimum applicant age is 18 years with no maximum age limit
  • Available in England, Scotland, Wales, and Northern Ireland
  • Adverse credit accepted on a case-by-case basis
  • Products with no early repayment charges available

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Costs

Interest Rates

When taking out a large commercial mortgage, the interest rate you pay will depend on several factors. These factors include your industry, the property you are borrowing against, whether you will occupy or let the property, your loan size, and your credit history. Generally, large commercial mortgage rates 2.25-5.5% above the base rate. The stronger your application in the above areas, the lower the rate you will pay.

Other Set-Up Costs

In addition to the interest charged, you will usually be charged several fees when taking out a large commercial mortgage. The main fees to consider include:

  • Lender arrangement fee: This fee is usually between 0.75-2% of the loan amount. The fee is charged when the application completes and can usually be added to the loan.
  • Broker fee: Although many brokers charge fees when arranging large commercial mortgages, we don’t. Where charged, these fees are often 1-1.5% of the loan amount, although they can vary.
  • Valuation fee: The valuation fee (also known as a survey fee) is a fee paid to a chartered surveyor to inspect and produce a report on the security property. The cost of appointing a surveyor varies depending on the type, location, and value of the property.
  • Legal fees: These fees are generally paid towards the end of the process. You are usually responsible for payment of both your own and the lender’s legal expenses. Again, these fees vary depending on the transaction type, loan size, and lender.

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Maximum Amount I Can borrow?

Loan sizes?

You can borrow a minimum of £25,000 with no maximum loan size.

Maximum loan to value

You can get large commercial mortgages up to 80% of the property value if you are the occupier and borrower. However, this is reduced for some industries and applicants with a history of adverse credit. Interest-only or capital repayment options are available.

Interest-only applications are usually capped at 75% LTV. Certain industries, such as doctors and dentists, can borrow more than 80% if they meet their lender’s criteria. If you are buying a property to let, the maximum LTV is usually limited to 75%.

Purchasing VAT registered Property

If you need to pay VAT on a property purchase, we can fund up to 100% of the amount due, often on the same terms as the commercial mortgage. If you take up this facility, you can repay the amount once you successfully reclaim the VAT.

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This is How Get a Large Commercial Mortgage

When applying for a large commercial mortgage, lenders will require specific documents. These include the latest two years trading accounts, proof of ID and address, asset and liability statements, and six months of business and personal bank statements.

As the loan size increases, the application process becomes more thorough, and negotiations around interest rates become more challenging. Therefore, it’s recommended to use a broker with experience in arranging commercial mortgages exceeding £1,000,000. An experienced broker can help manage the application, negotiate the interest rate and increase the chances of a successful application.

It’s essential to work with a lending specialist who can provide market-leading commercial mortgage rates.

The documents required

  • Latest 2 years trading accounts
  • Proof of ID & address
  • Asset & liability statement
  • 6 months of business & personal bank statements

Use a Specialist broker

When using a broker to arrange a commercial mortgage exceeding £1,000,000, it’s important to ensure that they have the necessary experience and contacts. An experienced broker can manage the application process, negotiate interest rates, and increase the chances of a successful application.

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Who can apply for a large commercial mortgage?

Who can apply?

We offer large commercial mortgages to a range of applicants, including individuals, non-UK based individuals, partnerships, pension funds, limited companies, and offshore companies. There is no maximum loan size, and we can lend to borrowers in England, Scotland, Wales, and Northern Ireland. The minimum applicant age is 18 years, and there is no maximum age limit.

Can applicants with bad credit find Commercial Mortgage?

Yes, we work with lenders across the market, which allows us to offer commercial mortgages to applicants who have suffered adverse credit. These products are known as bad credit commercial mortgages. We can arrange loans for borrowers who have previous defaults, CCJs, mortgage arrears, IVAs, bankruptcies, and repossessions.

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Frequently Asked Questions

What is the Typical Deposit Required for a Large Commercial Mortgage?

The typical deposit required for a large commercial mortgage varies depending on the lender and the borrower’s creditworthiness. However, most lenders require a deposit of at least 25% of the property value. Some lenders may require a higher deposit, especially if the borrower has a poor credit score.

What are the Top 5 Commercial Mortgage Lenders in the UK?

The top 5 commercial mortgage lenders in the UK are Lloyds Bank, NatWest, Santander, Barclays, and HSBC. These lenders offer a range of commercial mortgage products, including fixed-rate, variable-rate, and interest-only mortgages. Each lender has its own lending criteria, and borrowers are advised to compare different lenders to find the best deal.

What are the Advantages of a Semi-Commercial Mortgage?

A semi-commercial mortgage is a type of mortgage that is used to finance a property that has both residential and commercial elements. The advantages of a semi-commercial mortgage include lower interest rates, longer repayment terms, and the ability to borrow more money than with a traditional residential mortgage.

How Long Can a Commercial Loan Typically Last?

A commercial loan typically lasts from 3 to 25 years. The length of the loan depends on the lender’s lending criteria and the borrower’s creditworthiness. Some lenders may offer longer repayment terms, especially for larger loans, but this will depend on the borrower’s ability to repay the loan.

What is the Minimum Credit Score Required to Qualify for a Commercial Mortgage?

The minimum credit score required to qualify for a commercial mortgage varies depending on the lender. However, most lenders require a credit score of at least 620. Borrowers with a higher credit score are more likely to be approved for a commercial mortgage and may qualify for lower interest rates.

What are the Key Factors Affecting Commercial Mortgage Rates in the UK?

The key factors affecting commercial mortgage rates in the UK include the lender’s lending criteria, the borrower’s creditworthiness, the loan-to-value ratio, and the prevailing interest rates. Other factors that may affect commercial mortgage rates include the property’s location, condition, and intended use. Borrowers are advised to compare different lenders and to negotiate the best possible interest rate.

How much deposit will you be expected to put down?

When it comes to large commercial mortgages, lenders usually require a deposit of at least 25% of the property’s value. However, the deposit amount can vary depending on the lender and the borrower’s financial situation. Our commercial mortgage comparison page shows the latest products and their maximum loan-to-value ratios, helping you to find the best deal for your needs.

Can lending be agreed across multiple properties?

Yes, it is possible to secure funding across multiple properties. However, survey reports will need to be undertaken on each property offered as security. While there is no maximum limit to the number of properties that can be used as security, arranging financing for a large portfolio can be challenging. The logistics of arranging this tend to be the largest hurdle to funding very large portfolios.

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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.

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** 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.