What is Commercial Term Finance?
Commercial term finance is a loan from a bank, building society or other specialist funding institute that is arranged for the purpose of purchasing or refinancing commercial property that is primarily used for commercial or business use. Commercial term finance or a commercial term mortgage can be utilised for properties that a businesses will trade from or as a way of purchasing an investment, such as a buy-to-let commercial property. They can be seen as a complex form of lending, therefore knowledge of the industry is recommended when arranging.
Commercial Term Finance is split into two distinct groups:
Semi Commercial Mortgage – This would be shops with residential flats above.
Full commercial Mortgage – This relates to all remaining small and large scale commercial premises.
What Can Commercial Term Finance used for?
A commercial investment mortgage can be pretty much used for all types of commercial properties such as offices, warehouses, pubs, factories, land, certain Buy to Lets, guest houses, farms, care homes, schools, football & other sporting clubs, hotels etc.
A commercial mortgage can additionally be used for business expansion or improvements to a property or even to help with relocating the business as and when the need for expansion arises.
What are the Key Features of Commercial Term Finance?
- A wide spectrum of leasehold finance solutions available, starting from £50,000 with no upper limit
- High LTVs and low deposits
- Fast processing of applications, with decisions usually within a couple of days
- Access to a broad range of specialist and responsible commercial lenders
- Consolidated interest rates to suit your requirements best
- Long term commercial mortgages available (From 5 years up to 40 years)
- No hidden fees
- Business mortgages are available despite adverse credit score
What are the Commercial Finance Lending lending criteria?
- 30 year term: Available only with residential property as security.
- 20 – 25 year term: Available from select lenders with commercial property as security.
- 15 year term: The most common term for commercial property loans.
- 5 – 7 year term: Typical terms for commercial equipment.
- Shorter terms: Used for short term business loans, invoice discounting and development loans.
- 20 year interest only term: Available only with residential property as security, from some lenders.
- 10 year interest only term: Available from select lenders for commercial property.
- 1 – 2 year interest only term: The most common interest only term for commercial loans.
- No interest only term: The option that most lenders prefer that you choose.
What information would I need to provide for Commercial Finance Lending ?
- Applicant company name & Ltd Company number.
- Full property address.
- Personal or Directors & significant shareholders CV’s
- Copy of the tenancy agreement.
- Rental income proof
- Detailed build costs for relocation or expansion plans
- Schedule of proposed works and removal costs
- Details of the professional team (contractor, architect, structural engineer, CDM coordinator etc).
- Procurement Method ( Design & Build or Construction Management?).
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