What is different about commercial mortgages?

Commercial mortgages are very similar to residential mortgages. Instead of an individual buying the property a business is.

Unlike residential mortgages - commercial and semi commercial lending falls into a very strict lending criteria. Commercial lenders are not your normal high street building societies.

Most banks and building societies will offer commercial mortgages, but they have very strict lenders criteria. It is often better to approach a commercial broker or specialised commercial lender. You will find that the criteria will be a lot more relaxed.

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.

There are always special deals just like residential mortgages. You can also choose a fixed or variable 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.

Assuming you are happy with the 'Decision in principle' offer you will be asked to complete a formal application. This requires a lot more detail information about the business and the property.

The property will need to be valued before the lender can make an official offer. Any issues from the valuation or application can affect the rates given of the 'Decision in Principle' form. In some cases the lender will decline the deal.

Now the paper work needs to be sorted. This is the job of your solicitor who will handle the whole transaction from this point to completion. In just a few weeks you will be handed the keys to your new business or property.

Article Source: http://www.europe-property.org/articles

Sovereign Commercial Finance are a specialised commercial mortgage broker ,providing mortgages for all types of businesses.
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