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  • Commercial Property

    Finance for commercial properties

    Hello, can anyone help me understand commercial financing better? 

    I have 3 BTL, in the process of buying another 4 and have found a commercial vacant shop I’d like to buy. I’ve previously enquired about commercial mortgages for us, as we are expats the interest rate I was given was 6.25% 
    Seller wants a cash purchase, so my question is if we bought it in cash, tenanted it, when are we likely to see a better rate for mortgaging this property? 

    Purchase price £105k, will rent very easily for £7.5k a year, it’s not HMO returns but I feel commercial, longer term more passive investments are the direction I’d like to diversify in and these opportunities at this price point doesn’t come about too often. 

    So when will we have access to cheaper rates? After owning for a year? Two years? Or is it about owning more commercial properties? So on our second shop purchase can we expect a better interest rate for mortgage? 

    I understand being first time commercial owner and expat makes it expensive for us now. I’m wondering what we should be doing to be getting cheaper rates? 

    Does it make any difference if purchase was within Ltd company? 

    Thanks in advance
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    Commercial mortgages are more expensive. Lenders are more concerned about voids and so LTV’s are lower. There is a preference for repayment but you can normally negotiate to IO.

    The value of your property is small so this will rule out some lenders. As will nearby restaurants/bars.

    You need to let the property on a long lease say 5 year minimum (ideally 10 with an upwards only rent review every 3 or 5 years) in order to provide the lender with the necessary comfort.

    Being an ex pat will also limit your options although more and more lenders are coming into the market forex pat mortgages.

    I think the rate you were quote should fall when tenanted as above but it won’t go to residential rates.
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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022


    I have a commercial mortgage for a block of 12 flats which is at 6.1%.

    I'm an experienced landlord, not an expat and that was the rate available to me for a 5 year fix when I took it out four years ago. The value of the building is around £250,000

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    All comments are made in good faith and are given to the best of my knowledge and experience but I would advise you to consult an expert before making important decisions and I accept no liability for comments made.


    Thank you for sharing. I knew commercial loans were higher but I didn’t expect quite that high. Appreciate your feedback
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    (*Moderator note: Comment removed as member has not passed probation and therefore not permitted to make recommendations*).

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    if you can go as low a 55%LTV you could get a rate around 4.88% with Interbay

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    At 60% LTV I was getting 3.1% over base with Lloyds Business

    At 50% I got 3.25% over base with Cynergy (used to be Bank of Cyprus)

    I was offered similar rates with Handelsbanken

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