Any loan that is secured against a property that isn’t your main residence is classed as a commercial mortgage. These are usually individually assessed and priced according to risk, owing to the fact that almost every proposition is different. Buy-to-let mortgages are just one type of high volume, commercial mortgages available.
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 administration involved and the legal costs of taking security on a commercial property. Some lenders have a minimum loan amount 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 and typically they will raise a maximum of 70% of the property value by way of a commercial mortgage over a term of 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 individually in order to assess the level of risk. 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 will help you to source the finance you need.
For more information give one of our team a call.