Commercial Mortgages in London; Covering The Basics
What Is A Commercial Mortgage?
Residential mortgages are standard; everyone
knows what they are and how they work. Commercial Mortgages In London
are something entirely new to most people.
Commercial mortgages are secured mortgages with a commercial property (a non-residential property) as the security. These are considered business loans and come with different rates and values. It can be used to buy shop fronts, warehouses, workshops, office buildings, etc.
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Key Facts About
Commercial Mortgages
Compared to residential and other mortgages,
there are a few differences when it comes to Commercial Mortgages in London.
Unlike other standard mortgages, commercial mortgages do not have a fixed
interest rate. At the same time, the interest also tends to be much higher.
This is because these types of mortgages can be risky for lenders.
Contrary to residential mortgage rates, and in
comparison to standard business mortgages, commercial mortgages have a much
better interest. This is because commercial mortgages are secured using the
property.
The Process Behind A
Commercial Mortgage
As with other loans, you can begin the process
by hiring a Commercial Mortgage Broker to work with. A sit-down with a mortgage
broker can help assess your specific needs from the commercial mortgage and
come to a conclusion as to the best possible solution in your case. Then you
can fill out your asset and liability form as well as the application for the
mortgage. You can do this with the aid of a mortgage broker or by yourself.
Once this is done, the next is the valuation
of the property and the legal works. If everything goes well, the next step is
loan approval.
What Documents You
Will Need
●
Your credit report is
important too. However, one of the major differences between other loans and
commercial mortgages is that you can still get a commercial mortgage with a bad
credit score.
●
A lower credit score,
although it will still qualify you, will come with a higher interest rate.
●
Your bank statements
from the last 3 to 4 months.
●
Proof of your identity
●
Address
●
Your current lease,
lease agreements, or tenancy agreements
●
A business plan and
financial projections to decide the payback plan
Additional Fees You
Should Know
The most common additional fees you’ll have to
pay are arrangement, valuation, legal, and broker fees.
●
Arrangement Fees -
This usually only amounts to 1% or 2% of the total loan amount. It is the fee
for the loan arrangement.
●
Valuation Fees - This
is the fee paid to the property evaluator and can vary according to the
property and quotation.
●
Legal Fees - These are
the typical legal fays that you pay on your as well as your lender's behalf.
●
Broker Fees - As with
other loans, you will have to pay the broker their fee as your deal is
concluded. Some brokers may also charge you for the time they spend on your
case throughout the process.
Takeaway
As with residential and specialist mortgages,
you can work with a Commercial Mortgage Broker to help acquire the mortgage and
negotiate with lenders.
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