Commercial Finance is split into two distinct groups:
Semi commercial – This would be shops with residential flats above.
Full commercial – This relates to all remaining commercial premises such as offices, warehouses, pubs, factories, land, certain buy-to-lets, guest houses, farms, care homes, schools, football & other sporting clubs, hotels and so forth.
The loan is agreed depending upon the lenders belief that it will be repaid without difficulties and is split in the following ways:
Owner occupation – The borrower will utilise the security property themselves so the accounts for the business will be scrutinised by the lender to ensure the client will not struggle to make the monthly repayments.
Investment – The monthly payments on the mortgage will generally be covered by the rental payments received from the tenant. The lender will carefully review the comments made by the valuing surveyor so that they are comfortable that the expected rent plus buffer will easily cover the monthly mortgage payments, that the property is in a sought after location for prospective tenants and that the condition of the property will allow immediate occupancy, should the property not already be let.
NOTE – unlike Bridging Finance, Commercial Property Finance can often be raised by using a combination of the financial success of the business combined with the bricks and mortar value of the property.