Getting The Best Commercial Mortgage Rate

Trying to​ get the​ best commercial mortgage rate is​ perfectly understandable,​ after all a​ fraction of​ a​ percentage point can make a​ huge difference to​ the​ repayments on​ a​ larger commercial loan. However,​ when searching for a​ competitive rate you​ should bear in​ mind that the​ broker or​ lender is​ going to​ need plenty of​ information to​ support the​ enquiry.

Imagine if​ you​ will that someone puts a​ box containing a​ 300 piece jigsaw puzzle in​ front of​ you,​ shows you​ only ten pieces and says ”Describe the​ picture to​ me” – what are the​ chances you​ would be able to​ do it? you​ may be able to​ say “Well,​ it​ looks as​ if​ it’s a​ sunny day and I think I can make out part of​ a​ tree” but apart from that very little.

This may sound like an​ irritating evasion of​ the​ issue but the​ question ”I’m looking for a​ commercial mortgage,​ what’s the​ best rate you​ can get me ?” is​ equally difficult to​ answer if​ a​ useful response is​ expected. Not least because different people have a​ quite different understanding of​ what types of​ commercial mortgage will qualify for a​ headline rate.

Of course there are some brokers who will quote you​ a​ very favourable rate “off the​ top of​ their head.” This is​ a​ little disingenuous in​ that any rate will be largely meaningless and is​ probably made in​ the​ hope that they can impress the​ potential client and give him reason to​ return to​ them first.

Without doubt the​ best commercial rates are only available from the​ mainstream banks,​ including the​ likes of​ HSBC,​ Barclays,​ RBS etc. and some other commercial lenders such as​ the​ Skipton and Norwich & Peterborough Buildings Societies.

Remember though,​ before these organisations will consider offering their best rates they are going to​ want to​ know quite detailed information about the​ business they are lending money to,​ the​ people who control the​ company and full details about the​ property.

Typically speaking the​ best rates are only available for established businesses with a​ clean credit history and plenty of​ good quality and verifiable accounting information. Professional property investors are also generally considered good quality applicants,​ but only if​ the​ rental income stacks up. the​ following points should explain what a​ lender would generally look for:

1. Established Business: Would mean that the​ business has been profitably trading for about 3 years.

2. Good quality and verifiable accounting information: Accounts that have been professionally prepared by a​ qualified accountant and if​ appropriate filed at​ Companies House.

3. Clean Credit: All existing loans and mortgages are up to​ date,​ no late payments to​ suppliers. No CCJ’s either in​ the​ business name or​ the​ individual director’s personal names.

4. Investment properties would usually need to​ have a​ formal lease in​ place with a​ good quality tenant. the​ rental income will need to​ cover the​ mortgage payments by a​ healthy margin.

The above points only relate to​ applicants chasing the​ headline rates. There is​ now a​ good degree of​ flexibility for businesses who cannot fulfil the​ above criteria.

When approaching a​ lender or​ broker with a​ view to​ obtaining the​ best possible commercial mortgage rate (or re-mortgage) an​ applicant should be prepared to​ divulge all the​ above information before expecting a​ sensible answer. at​ the​ very least it​ would be recommended to​ have the​ last three years’ accounts,​ brief CV’s for each director,​ an​ up to​ date business plan and as​ much information as​ you​ can muster about the​ property in​ question.

There is​ no doubt that there are some very competitive mortgage rates available for the​ right businesses and researching the​ market has never been more important. By all means approach your existing bankers first as​ they most likely to​ be keen to​ keep your business but having other options available puts you​ in​ the​ strongest position when looking for the​ best commercial mortgage rate.
Getting The Best Commercial Mortgage Rate Getting The Best Commercial Mortgage Rate Reviewed by Henda Yesti on July 01, 2018 Rating: 5

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