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There is very little difference between commercial and residential mortgages. In fact the only real difference is that the company will own the property and pay back the loan. However, the lending criterion is a lot different to residential mortgages. The lenders willing to work in this sector are not your normal building societies. Most people will look to their high street bank for commercial mortgages. The high street banks often have very strict lending criteria and often turn down loans. What most people do not realise is that there are hundreds of commercial brokers and commercial lenders who understand business funding and have much more relaxed criteria. The maximum amount that the lender will typically give is normally 85% of the purchase price. However 100% deals are available with extra security. You can take out a repayment or interest only mortgage with the option of repayment or interest only. The period of the loan can be anything from 1 to 30 years. Just like residential mortgages, there are always special deals available. You can also choose between a variable or fixed rate. The process is very simple. You first complete a very simple application form (one A4 sheet) this will provide enough information for the lender to give you a 'Decision in Principle'. This is a letter from the lender detailing the terms and rates of the mortgage based on the information you have provided. If you are happy with the decision in principle you will be asked to complete a formal application, which will go into great detail about the property and your business. Before the lender makes a formal offer the property/business needs to be valued. If any issues arise from the valuation or formal application then the lender may withdraw from the deal or change the terms offered on the 'Decision in Principle'. At this point your solicitor will handle the transaction and within a few weeks you will be the proud owner of a new business or premises.
Article Source: http://www.financemanual.com
Sovereign Commercial Finance are a specialised commercial mortgage broker ,providing mortgages for all types of businesses. Click here for other unique commercial mortgage articles.
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