Specialist Lending - May 2017  

Getting commercial mortgages for your clients

  • Grasp what a commercial mortgage is and how it differs from a residential mortgage.
  • Understand the information required to apply for a commercial mortgage.
  • Learn how to match your client with the right commercial mortgage product.

“Commercial mortgages are available to support customers with the purchase of a variety of assets, such as a property from which the business is operating, other commercial entities or general capital expenditure,” he adds.

The bank’s portfolio buy-to-let is aimed at professional landlords with up to 25 properties – yet another type of commercial mortgage which advisers may need to be aware of.

Mr Hallett says: “The range allows limited companies, limited liability partnerships and professional individual investors, with up to 25 properties assessed on a cross collateralised basis, to choose from a number of product options specifically designed for their needs. 

“Loans are available up to 75 per cent LTV aggregated at portfolio level and an annual overpayment of 10 per cent of the initial amount borrowed is allowed, without incurring an early repayment charge.”

Mr Tillcock points out commercial mortgages can be used to raise funds for a number of business scenarios as well.

He lists several examples, including new business start-ups, business turnaround solutions, short-term finance and debt consolidation, working capital raising, property improvement, business expansion, remortgaging and commercial investment.

Preparing your case

Whatever the need for a commercial mortgage, applicants will have to be prepared to make a case for the loan.

This is where it is important for brokers or advisers to establish a relationship with their client to see them through the process.

As a spokesperson for Santander points out: “Brokers/advisers can play a role in securing bank funding for commercial mortgages.

“Understanding and outlining their client’s short, medium and long-term investment intentions is key to matching investors’ needs to the individual lenders’ funding appetites, which can vary.”

“This knowledge of lender appetite and process ensures the client receives an optimum outcome - securing their investment asset - and creates the basis for a strong, long term and recurring investor/bank relationship built on shared purpose and needs,” Santander's spokesman states.

Where residential mortgage applicants have to prove their earnings and ability to pay back the loan over time, so do commercial mortgage customers.

Mr Tillcock suggests the lender will want to see a significant amount of financial information about the business before agreeing to lend.

He advises: “Three years of published accounts are typically required, along with information about the background of both the firm and its owners, as well as the vital information on how payments will be met. 

“Proper business plans can help point to a rosy future but previous income will also be considered.”