Property Finance

April 9, 2016

Property Finance

commercial mortgage Commercial Mortgage

Typically defined as an owner occupier purchase where the premises being acquired are for use by the business buying them. Commercial mortgages can be used where the purchasing entity is the director or another ‘group’ company, the purchasing and occupying entities do not have to be exactly the same, just sensibly related.

This type of mortgage finance is generally driven by affordability rather than any set ratios, as a guide a company could borrow;

  • Up to 80% of the property value, up to 100% with additional security or by using a combination of lending options
  • Rates from 2% over base rate
  • Terms from 6 months to 30 years, typically a 15 year period is common
  • Interest only or capital repayment options, where interest only is used then a maximum term of 10 years is typical
  • Can be used to repay bridging finance or other short term purchase loans

We use a wide variety of commercial mortgage lenders. This is done so there are options and choices available no matter what size, age or story exists in your business. Different lenders have different preferences in terms of size of loan, geography and industry sector so carrying a variety of lenders means we can provide solutions in most cases.

Different lenders have very different criteria and the way in which loans are sanctioned varies massively. The best advice we can give is it ask, we can normally give a guide as to what is possible instantly and in most cases can provide a decision in principle within 24 hours.

property investment loansProperty Investment Loans

This is where a property is being purchased by a person, partnership or company with the specific aim of letting it to a third party.

There are generally two types of property investment, being commercial investment property (CIP) and residential investment property (RIP). The two are very similar in summary but are viewed very differently by lenders.

As a guide;

  • Experience of letting property need not be an issue
  • Difficult properties such as above takeaways, previously empty or under market value purchases can all be financed
  • With commercial property the length of lease does not have to drive the term of the mortgage
  • Each CIP or RIP is judged as a standalone transaction
  • Loans can be made in an individual name, company, partnership or SIPP
  • Capital repayment or interest only available
  • Rates from 3% over base rate are typical although this can vary higher or lower
  • Answer within 24 hour generally possible
  • Can finance purchases direct from auction
  • Loans from £50k upwards
  • Can be used to repay bridging or other third party finance

The best option is to provide details of the property under consideration to us, we can then give an indication of likely cost and terms meaning you can make an informed decision quickly.

We work with a wide variety of lenders in this sector. Lender appetite and policy changes regularly so please contact us so we can advise you of your options.

Bridging Finance

Short term secured lending which can be used for a variety of purposes. Typically offering a term from 1 month to 2 years.

Bridging finance is a short term solution, having a solid exit strategy is important before you enter any bridging agreement.

What bridging finance can offer is;

  • Quick turnaround where completion is needed, bridging finance can be put in place inside 72 hours
  • Interest is charged monthly rather than as an annual rate
  • Interest can be ‘rolled up’, meaning there are no repayments to make during the course of the loan. Interest is added to the amount borrowed and paid in one go at the end of the term
  • Allows for completion on properties purchased at auction
  • ‘Bridge to Let’ is available where bridging finance is used to enable the purchase to happen with a buy to let mortgage then used to repay once the purchase is completed
  • Can be used on commercial or residential properties
  • Can be used to raise finance for almost any reason
  • Adverse credit profiles are accepted by many lenders
  • Land can be purchased and used as security

The advantages to bridging finance is that it is quick and less dependent on your financial standing or credit record. It allows for funds to be raised quickly and where traditional lending would not accommodate what you want to achieve.

We work with many different bridging lenders, all have different rates, different sectors and different criteria. The rates offered by bridging lenders vary greatly, we find that lenders alter their rates per deal and to suit their appetite at that time.

If you need short term finance or a quick release of cash then bridging may be a solution for you. Please contact us to talk through what you want, we can quickly provide a guide as to what you can do and on what basis.

property development financeProperty Development Finance

Lending to enable property refurbishment, conversion or new builds. This can be anything from a plot of land with or without planning consent where a ground up build will take place, to a conversion from commercial to residential use, to residential property being refurbished. The property can be sold or let at the end of the project.

The typical structure of a development finance loan would look like;

  • Interest rolled up with no repayments required during the term of the loan
  • Loan term bespoke to the project being undertaken
  • Typically up to 70% of purchase price can be financed and 100% of the build costs
  • Build costs typically advanced in arrears against work completed
  • Experienced and inexperienced developers
  • Where additional security is available then up to 100% of total project costs could be financed

Many lenders will entertain basic works or light refurbishment (where no major structural changes occur) on a straight bridging basis or with more loose criteria. Ground up developments are viewed differently with other lenders having an appetite to finance these projects. Most lenders have a geographical preference, please talk to us so we can give you the right information for your specific project.

 

Please note – All credit is provided on the terms offered by the individual lender. Ensure you understand the agreement you are entering and are comfortable making the repayments. It is always recommended that you seek legal advice before entering any credit agreement.