Frequently Asked Questions
How much deposit is required for a commercial mortgage?
The normal minimum deposit required is 20% although, in certain situations, a lower percentage deposit may be acceptable. Obviously, the amount of deposit provided can impact upon the interest rate and, therefore, the loan repayments – a larger deposit could mean a lower interest rate and lower monthly repayments.
Can commercial mortgages be used to liquidate other debts?
Yes, it is possible to use the proceeds from a commercial mortgage to clear other debts that your business may have such as an overdraft or hire purchase commitment.
You would only wish to do this if it were financially viable, for instance, due to the interest rate being lower on the commercial mortgage.
If I have a poor credit history will it be possible to get commercial finance?
There are commercial lenders who will consider applications for finance from those who have the likes of CCJs, defaults, Individual Voluntary Arrangements (IVAs) and even liquidations.
How long does it take to raise the finance?
The more complex the case then the longer it is likely to take. In certain urgent instances, it may only take a few days but normally the process could run into several weeks. A clearer indication will be provided by the lender/broker when discussing the lending proposition.
How much can I borrow on a commercial mortgage?
The minimum amount is £25,000 and there is no maximum.
Who is responsible for the commercial mortgage repayments?
In the case of the borrowing being taken out in the name of a limited company, it is likely that the directors who will be held liable for the repayments if the company do not meet them as directors’ guarantees would normally form part of the security requirements. In the case of a sole trader or partnership it is the named individuals that are deemed to be responsible or anyone else mentioned as mortgagee.
What can the proceeds of a bridging loan be used for?
Any legal purpose such as to purchase a property pending the sale proceeds of another property being received to liquidate the bridging loan.
What period of time can I repay a business loan over?
This can be anything from 1 to 10 years.
In deciding upon the term, factors such as the amount your business can afford to pay back each month and the “lifespan” of the item being purchased may be taken into account.
Is security required for a business loan?
It is possible to arrange a business loan on either a secured or unsecured basis.
There are a number of factors that are involved in such a decision when your business loan application is being underwritten by the lender. For instance, the amount you wish to borrow, your credit history with the credit reference agencies and the strength of the business from a financial perspective as evidenced by the likes of audited accounts.
Why should I arrange a commercial mortgage rather than rent premises?
Commercial mortgages enable you to purchase business premises that have the potential to increase in value and you are protected against the likely volatility of increasing rental payments.