Any loan that is secured against a property that isn’t your residence is classed as a commercial mortgage. Buy-to-let mortgages are a type of high volume, commercial mortgage. They are individually assessed and priced according to risk, owing to the fact that almost every proposition is different.
Commercial mortgages are generally used when the lending can’t be supported by a business loan and when it comes to larger amounts; lenders need security in order to reduce their level of risk. It is often deemed uneconomic to borrow under £50,000 due to the administrative and legal costs of taking security on commercial property. Some lenders will set a minimum figure of £75,000 and in some cases, even more.
Lenders will generally take the property that you are buying as the only security against the loan. Typically this will be 70% of the property value with the mortgage set up for between three and 25 years.
Unlike residential mortgages and personal loans, the rates charged for commercial mortgages aren’t pre-determined. When an application is made for a commercial mortgage the lending manager will look at each case carefully in order to assess the risk level. The rate offered in the loan proposal will vary according to the established risk the loan poses.
At David Allen Financial Services we have the expertise and experience of dealing with complex cases such as commercial mortgages. We have good working relationships with lending managers within financial organisations and can help you to source the finance you need.
For more information give one of our team a call.