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Questions & Answers...

[Q]
We are seeking to acquire a freehold business, can we obtain a 100% mortgage?

[A]
No – the maximum loan amount would be between 75% - 80% of purchase price or valuation, whichever figure is the lower.  The only way to achieve 100% mortgage would be with suitable additional security being offered such as a charge over a residential property providing there is additional equity available.


[Q]
We seek to purchase a trading business on a leasehold basis where the lease has 25 years or less remaining. The purchase price is £150,000 what is the maximum loan to value?

[A]
On this type of business acquisition, which is typically for convenience stores, pubs and restaurants, where you are acquiring the business but not the property, the normal maximum funding available would be up to  50% of purchase price. The loan to value on these types of purchases are low as it is deemed to be unsecured lending and sometimes needs to be supported by a top up loan via the government enterprise scheme. Again, if you can provide suitable additional security it may be possible to raise a higher loan advance of up to 100% of purchase price.

[Q]
What is meant by non-status lending in the commercial mortgage sector?

[A]
Non status lending can cover several areas, such as a client with adverse credit, a start-up business, an existing trading business where the accounts do not show sufficient profits, or where the type of business or commercial property is not acceptable to main stream commercial lenders. With this type of lending interest rates can be significantly higher and in some cases a short term (bridging) loan may be used until the business has been turned around.

[Q]
Do Commercial lenders offer interest only commercial mortgages for the full term of loan?

[A]
A number of  Commercial lenders offer an interest only period for the first
10 years or a repayment basis for up to 25/30 years.

[Q]
If we purchase a commercial property at auction what are the financing options available?

[A]
At auction you would usually have to pay 10% on the day with 28 days to complete the purchase. Whilst it may not be possible for a long term Commercial lender to be in a position to provide funds within 28 days, a bridging lender can usually complete in this time frame, with a subsequent refinance to a long term Commercial lender. Typically bridging lenders will offer a 1 - 18 month term with competitive monthly interest rates.

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