What is different about commercial mortgages?

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.

The main high street banks will offer simple commercial mortgages, but the lending criteria are often very strict. There is however specialist commercial brokers and commercial banks that have a much more relaxed lending criteria.

Most lenders will give you 85% of the purchase price. This can be extended to 100% or more with additional security.

You can have the mortgage for any period between 1 to 30 years and the type of mortgage can be a repayment or interest only.

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.find-investment-advice.com

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