Commercial Mortgage Broker
Whether you intend to be the owner-occupier or for a commercial investment property
/ FCA Registered
Reference: 729876
Finance for Commercial Property
A commercial mortgage funds the purchase or refinance of property your business trades from, or property you buy to let to a commercial tenant. Mill Wood Finance has arranged commercial property finance since 1999, working across high street lenders, challenger banks, specialist commercial lenders and private banks.
Commercial lending is priced case by case rather than to a published rate card, which means the same purchase can attract very different terms depending on which lender sees it and how it is presented. That is the argument for using a commercial mortgage broker: a bank can only offer you its own products, and you will not know whether better terms existed elsewhere until it is too late to go and find them.
NB: Mill Wood Finance do not assist with consumer buy-to-let mortgages.
Owner-occupier commercial mortgages
If your business will trade from the property, this is an owner-occupier mortgage. It covers offices, retail units, industrial and warehouse space, workshops, surgeries, nurseries, hotels, care homes and licensed premises.
Lenders underwrite these against the business rather than the property alone. They will want filed accounts, recent management figures, and evidence that the payments are affordable from trading profit. Owner-occupier cases are treated as lower risk than investment purchases, so they usually attract higher loan to value and keener pricing.
Commercial investment mortgages
If you are buying premises to let to a business tenant, the lender underwrites the property and the lease rather than your trading income. What counts is the strength of the tenant, the remaining lease term, any break clauses, and how the rent compares to the purchase price.
Lenders apply a rent cover test, requiring the rental income to exceed the mortgage payments by a set margin. That test often caps the loan before the loan to value limit does, which catches people out. Portfolio purchases and limited company or SPV borrowing are both well established here.
Semi-commercial and mixed-use property
Mixed-use property, typically a shop or office at ground level with flats above, sits between residential and commercial underwriting. Fewer lenders participate, and those that do look closely at the split between commercial and residential floor space. A vacant ground-floor unit or a short lease on the commercial element narrows the options further.
Deposits and the cost of buying
Deposit and loan to value are the same figure from opposite ends. A mortgage at 70% loan to value means a 30% deposit. What you will need depends on the property type, the strength of the business or the lease, and your track record.
Two points worth knowing before you budget:
- Lenders advance against the lower of the purchase price and the valuation. A down valuation increases the cash you need rather than reducing the loan proportionally.
- The deposit is not the full cost. Stamp duty, arrangement fees, valuation fees, legal costs and any VAT on the purchase sit on top and need funding separately.
If cash is the constraint, equity in another property can often be cross-charged as security in place of some or all of a deposit.
Refinancing an existing commercial mortgage
We handle as much refinance work as purchase. The usual triggers are a term reaching its end, a fixed rate expiring onto a worse variable, or wanting to release equity built up in a property.
It is also worth a review if trading has strengthened since the mortgage was taken out. Terms agreed when the business was less established are frequently improvable, and a lender who declined the case originally may look at it differently now.
What lenders assess
- The trading position of the business, or the tenant and lease on an investment purchase
- The property itself, including condition, construction type, use class and how readily it could be relet or sold
- The size of the deposit and a clear, evidenced source for it
- The track record of the people behind the application, particularly on portfolio cases
- Credit history for the business and its directors, though historic and satisfied issues are usually workable with the right lender
What lenders assess
Six to twelve weeks from instruction to completion is normal, with valuation and legal work accounting for most of it. Having accounts, lease documentation and title information ready before we approach lenders shortens that, and we will tell you at the outset what to gather.
How Mill Wood Finance can help you
Who are Mill Wood Finance?
We have brokered finance for UK businesses since 1999. Mill Wood Finance is authorised and regulated by the Financial Conduct Authority in its own right under reference 729876, rather than operating under another firm's permissions.
Our ethos and service
We work for you and not for the lenders we hold relationships with. You will have a named broker on the phone rather than a call centre, and we will tell you when a deal does not stack up instead of pushing it into the market to see what happens.
Let's talk about your commercial property finance
Our team of experienced brokers is here to help your business secure the finance it needs.
Michael Bolland leads our Asset Refinance division and is your dedicated point of contact for all business refinance enquiries. Whether you are buying premises for the first time, adding to a property portfolio, or looking at a mortgage that is coming to the end of its term, Michael is on hand to review the situation and tell you what is realistically available.
Michael Bolland
Email: mbolland@millwoodfinance.com
Tel: 01273 523690