FAQs

When it comes to purchasing a property at auction, sometimes traditional lending sources just won't cut it. That's where auction finance steps in, also known as auction property finance or an auction bridging loan. This specialised form of financing is designed specifically for those who need a quick and flexible solution. Unlike traditional high-street bank loans, auction finance offers fast turnarounds and a more lenient set of criteria. It fills the void for individuals who may be unable or unwilling to rely on traditional lending sources.

Auction finance is the go-to solution for purchasing property at auctions due to its quick setup time, typically within 3 to 14 days. It offers flexibility in terms of the loan amount, ranging from as low as £26k to a staggering £250m or more. When participating in an auction, buyers are required to provide a deposit of 10% of the property price on the day of the auction, immediately after placing their winning bid. To secure the purchase, buyers must complete the transaction within 28 days; otherwise, they risk losing both the property and their deposit. Once the long-term mortgage is in place, buyers can utilise the funding to repay the auction bridging loan. To secure the purchase, buyers must complete the transaction within 28 days; otherwise, they risk losing both the property and their deposit. Once the long-term mortgage is in place, buyers can utilise the funding to repay the auction bridging loan.

Auction finance in the UK can be used to purchase a wide range of property types like: Un-inhabitable properties Un-mortgageable properties Repossessions Buy to lets Houses of Multiple Occupancy (HMO) Multi-Unit Freehold Blocks (MUFB) § Buying a property with a short lease Property flips Investment purchases

Auction finance opens up a world of possibilities when it comes to purchasing properties at auctions. Not only can it be used to buy properties outright, but it can also fund any necessary refurbishments or renovations to increase the property's value before selling it. Residential Property Commercial Property Industrial Property Development Opportunities

The condition of a property plays a crucial role in determining its mortgageability. For a property to be deemed suitable for a mortgage, it must be structurally sound and in good condition. This type of financing is specifically designed for properties that require significant repairs or renovations to make them habitable again.

When considering purchasing a property at auction, it is crucial to come prepared with your finances in order. Instead of relying solely on cash, you have the option to utilize an auction finance loan, such as a bridging loan, which allows you to borrow the necessary capital beforehand. Before placing a bid, you will need to provide proof that you have the funds available to cover the property's cost. This can be achieved by obtaining an 'in principle' auction finance loan, which guarantees that the funds will be accessible for the purchase. Once approved, it is essential to be ready to access the funds within 28 days from the auction day. Once you have successfully secured the winning bid and the money has been transferred to the seller, your repayment options will depend on the type of auction finance you have chosen.

When considering your eligibility for an auction finance loan, lenders take into account several important factors. These include The amount of cash you plan to invest in the purchase The level of security provided by the property The loan-to-value (LTV) ratio of the property As well as your credit history and score By carefully assessing these elements, lenders can determine whether you meet the requirements for the loan.

When applying for a loan, it's important to provide the necessary personal information to ensure eligibility and suitability based on your financial situation. This includes details about your income, employment status, credit history, and financial commitments.

When applying for a loan, it's important to provide the necessary personal information to ensure eligibility and suitability based on your financial situation. This includes details about your income, employment status, credit history, and financial commitments.

Yes. Looking to secure a property in a jiffy? Auction finance might just be the answer you're looking for! Unlike conventional mortgages, the process is lightning-fast and requires minimal paperwork. You could have your loan approved and funds available in just a matter of days.

When it comes to auction finance, the amount you can borrow depends on a few key factors. These include how much you need, the value of the property you're interested in, and the size of your deposit. Typically, lenders will want you to borrow at least 50-75% of the property's value.

Did you know that it's possible to borrow 100% of your auction purchase price? However, to make this happen, you'll need to provide additional security over other properties.

To secure an auction finance loan, various factors come into play. Lenders in this field prioritise the security of the property and the loan-to-value ratio (LTV) over a flawless credit history. While certain lenders may consider additional aspects such as your credit score, employment status, financial obligations, and income, others may not.

Purchasing a property at auction can be a smart move for several reasons. Firstly, you have the chance to snag the property at a discounted rate, which means you could potentially earn a profit down the line. Plus, the process is much faster and more secure than traditional real estate purchases. When you make a bid at an auction, it's legally binding, so you don't have to worry about the seller backing out or another buyer swooping in at the last minute.

When it comes to auction finance, having an exit strategy is crucial for both individuals and businesses. There are four common exit strategies to consider: Paying off the loan in full Exiting early (with a possible fee) Refinancing with a different lender Selling assets to raise funds Paying off the loan in full is the most straightforward option, while early exit can limit interest and offer more financial flexibility.

There are several fees associated with Auction Finance that you should keep in mind: Broker fee: This fee covers the arrangement of the loan by the broker. Lender facility fee: When the lender provides the lending facility, they may charge a fee. Valuation fees: Obtaining a valuation of your property is crucial in the Auction Finance process. Lender legal costs: As the borrower, you are responsible for covering the lender's legal costs. CHAPS fee: This fee is a standard flat fee that is associated with the Auction Finance process. Exit fees: Some lenders may charge an early exit fee. Redemption administration fee: Completing the loan involves various administrative duties, such as removing the charge over the property. When considering Auction Finance, it's important to be aware of these various fees. Remember, each fee can vary depending on your specific circumstances.

Residential Bridging Loans in the UK can be used to purchase a wide range of property types like: Un-inhabitable properties Un-mortgageable properties Repossessions Buy to lets Houses of Multiple Occupancy (HMO) Multi-Unit Freehold Blocks (MUFB) § Buying a property with a short lease Property flips Investment purchases

A residential bridging loan (or 'bridge loan') can be useful if you need to borrow money for a short period. It can help to 'bridge the gap' if you want to buy a new home before selling your old one. Rather than taking months to secure, like traditional bank loans, they can be obtained within days.

These loans can be used for a variety of purposes, such as Purchasing a new property before selling your current one Financing property refurbishment or renovation projects Avoiding property chain breaks caused by mortgage delays They're perfect for those looking to acquire properties that don't meet traditional mortgage lending criteria Need quick completion for auction purchases

The loan amount can range from a modest £26,000 to several million pounds, depending on the specific circumstances of the lender and borrower. To determine the loan-to-value (LTV) ratio, lenders typically offer up to 70-75% of the property's value as a loan. When it comes to loan duration, bridging loans usually have terms of 1-24 months. It's important to note that interest rates for bridging loans can be higher than those of traditional mortgages. These options can include monthly interest payments, retained interest, rolled-up interest, or a combination of these. Lenders will require a clear exit strategy for repaying the loan.

Bridging loans are accessible to: A wide range of individuals, including homeowners, property investors, and developers To secure the loan, lenders will scrutinize the borrower's credit history, income, and repayment strategy The lender will evaluate the property being purchased and any additional collateral offered It's crucial to have a solid exit strategy in place to demonstrate a viable plan for repaying the loan

Avoiding Delays and Ensuring a Seamless Transition Property Chain Breaks When it comes to purchasing a new property before selling your existing one, bridging loans come to the rescue. Auction Purchases For those looking to secure a property at an auction, bridging loans are the perfect solution. Auctions often come with tight completion deadlines, and bridging loans provide quick financing to help you secure the property without any hiccups. Property Refurbishment & Renovation If you're planning on refurbishing or renovating a property before arranging longer-term financing. Bridging loans provide the necessary funds for your development projects, allowing you to get started without any delays. Purchasing Non-Standard Properties Bridging loans also come in handy when purchasing non-standard properties. These unconventional properties may not meet the criteria for traditional mortgages, but bridging loans can bridge the gap and provide the necessary financing.

Residential bridging loans offer a versatile solution for a range of property types. Whether you're looking to purchase a residential home, a stylish apartment, or a charming house, these loans have got you covered. They even extend their support to properties that may be deemed uninhabitable or have non-standard construction. Additionally, if you're eyeing an auction property. A project that requires significant renovation or refurbishment, residential bridging loans can provide the financial boost you need.

Speedy Application Process: approvals are often granted in just a matter of days. Flexible Repayment Options: Customised repayment plans are available to suit the borrower's preferences, including options like monthly interest payments or interest that is rolled up. No Early Repayment Charges (ERCs): With certain bridging loan options, you have the freedom to pay off your loan ahead of schedule without any extra fees. Second Charge Loans: Consider using a bridging loan as a second charge alongside your existing mortgage. This option can provide the financial boost you need. Flexible Lending Criteria: Bridging loan lenders may offer a more flexible approach to lending than traditional mortgage lenders.

There are several fees associated with Residential Bridging Loans that you should keep in mind. Broker fee - This fee covers the arrangement of the loan by the broker. Lender facility fee - This fee is charged by the lender for providing the necessary facilities for your loan. Valuation fees - These fees are incurred when obtaining a valuation of your property. Lender legal costs - These costs are always paid by the borrower and are dependent on the complexity of the loan deal. CHAPS fee - This fee is a standard flat fee that is charged for certain services related to your loan. Early exit fee - known as the exit fee. Redemption administration fee - This fee is in place to cover the administrative duties involved in completing the loan, such as removing the charge over the property. When considering Residential Bridging Loans, it's important to be aware of these various fees. Remember, each fee can vary depending on your specific circumstances.

Commercial bridging loans are the ultimate lifesavers when it comes to swiftly and temporarily tackling the expenses that come hand in hand with acquiring a shiny new commercial property. These financial superheroes are specifically crafted to bridge the gap between waving goodbye to an old loan, like a mortgage, and embracing your dream property.

Commercial bridging loans are incredibly versatile and can be utilised for a multitude of purposes. Whether you're looking to purchase business premises, acquire a new property, or make enhancements to your existing property, a bridging loan is the perfect solution. Our commercial finance can be used for: Aid with business cashflow Purchase of new business/premises Broken property chain Redeem existing business loan, or charge on asset(s) Finance a development opportunity Separate investment opportunity Other debt consolidation End of term mortgage repayments Finance a Property refurbishment Commercial property comes in all sorts of shapes and sizes, encompassing office blocks, farms, factories, holiday parks, car parks, and care homes.

A typical commercial bridging loan usually spans from 3 to 12 months, with the possibility of extending it up to 24 months. The borrowing amount and interest rates are subject to variation, ensuring flexibility for borrowers. Additionally, a one-off arrangement fee of 1-2% of the loan amount is to be expected. This loan can be conveniently secured against commercial property or even a portfolio of properties, providing borrowers with multiple options.

Commercial bridging loans are available to a wide range of borrowers, including limited companies, individuals, owners with corporate structures, and trusts. Having a well-thought-out financial plan and a clear exit strategy may also be necessary to meet the eligibility criteria for these loans.

When time is of the essence and you need funds swiftly to acquire property before securing a long-term loan, commercial bridging loans come to the rescue. These loans are not only handy in competitive markets where properties are snatched up in the blink of an eye, but they also serve as a solution when a traditional loan is out of reach.

Looking for a flexible financing option for your commercial property needs can include: Purpose-built industrial units Warehouses, factories Office blocks Retail stores Shops Restaurants Hotels Other commercial properties

Commercial Bridging loans come packed with a range of impressive features that make them the go-to solution for quick and hassle-free funding. These loans are designed to be short-term powerhouses, typically spanning 3-12 months, although they can stretch up to a generous 24 months if needed. So, whether you're looking to bridge the gap for a few months or need a bit more time, bridging loans have got you covered. But what truly sets them apart is their lightning-fast approval process. Unlike traditional loans that can take ages to get the green light. If time is of the essence and you need cash pronto, bridging loans are your ultimate saviours. Bridging loans are secured against existing property or even a portfolio of properties.

Our unique approach involves thoroughly examining the entire market to find the perfect match between borrowers and lenders, ensuring the best possible outcome for all parties involved. This personalized process guarantees peace of mind, knowing that you are securing the most advantageous arrangement available. It's crucial to note that each lender has their specific criteria regarding loan size and acceptable types of security. The funding application process can be both demanding and intricate. By choosing our services, we collaborate closely with an underwriter to enhance the appeal of your proposal to lenders, significantly increasing the chances of a successful outcome. Thanks to our extensive network of lenders, we possess strong relationships that greatly enhance our ability to secure a deal.

When considering a Commercial Bridging Loan, it's important to keep in mind the various fees that may be associated with it. These can include: Broker fee, which covers the cost of arranging the loan. There may be a lender facility fee, which covers the cost of providing the lending facility. Valuation fees may also apply, depending on the type of property and whether an in-person or desktop valuation is required. Lender legal costs are typically paid by the borrower and can increase with the complexity of the deal. A CHAPS fee may also be charged, and some lenders may impose an early exit fee. A redemption administration fee may be required to cover the administrative duties involved in completing the loan When considering Commercial Bridging Loans, it's important to be aware of these various fees. Remember, each fee can vary depending on your specific circumstances.

Land bridging finance can be utilised for a range of purposes, such as: Purchasing land quickly: With land bridging finance, you can quickly secure a land purchase, even if you don't have instant access to funds from selling your current property. Refinancing Land: It's pretty normal to experience delays when it comes to planning, and sometimes you might even need to refinance before your loan term is up. You can refinance your land to extend the loan term and give yourself a chance to fully capitalise on its value. Property development: You can use it to fund property development projects, like building homes or offices on the land you bought. Auction purchases: Land bridging finance allows buyers to finance properties purchased at auctions and seize the land opportunities they desire without having to wait for traditional financing.

Short-term financing: Usually, land bridging finance is a loan that lasts for a short period, usually from a few months to two years. However, the terms may differ depending on the lender. Fast approval and funding: Bridging loans for land are famous for their speedy approval and funding process. Secured loans: Typically, The loan is secured against the land or property being purchased. This serves as collateral for the loan. However, there are other options available. For instance, the loan could be a residential bridging loan secured on a residential property, or it could be a commercial bridging loan secured against a commercial property. Higher interest rates: Bridging loans for land usually come with higher interest rates than traditional long-term mortgages because of their short-term nature and increased risk. Flexible repayment options: Borrowers have the flexibility to select different ways to repay their loans. They can opt for making monthly interest payments or they can choose to accumulate the interest and repay it at the end of the loan term.

Lenders may have different lending criteria for land bridging finance, but they typically take into account certain factors such as: Loan purpose: Lenders check out what the loan is for, like buying land or building a property, to figure out if the project is doable. Exit strategy: When taking out a loan, it's important to have a solid plan in place for repayment. Make sure your plan is clear and achievable to ensure a successful loan repayment. Property valuation: When lenders assess the worth of the land or property being bought, they consider it to determine the loan amount and loan-to-value ratio (LTV). Land bridging loans cannot be evaluated through automated valuations. Borrower's creditworthiness: When it comes to land bridging finance, lenders are mainly interested in the value of the security (i.e. the land or property) rather than the borrower's credit history.

It all boils down to the specific designation and intended use of the land when it comes to planning permission. If the land already has planning permission, then financing and development can be a breeze. But if it doesn't, don't worry! You can still get land bridging finance as long as you have a solid plan to obtain the necessary permissions.

The loan-to-value ratio represents the loan amount as a percentage of the value of the land or property being purchased. LTV ratios for land bridging finance typically range from 50% to 65%, depending on factors such as the borrower's creditworthiness, the property's location, and the lender's criteria. However, it is important to note that each lender may have its own specific LTV requirements.

The land bridging loan typically doesn't stick around for too long, usually lasting from a few months to two years. But keep in mind that the actual length can vary depending on the lender, the borrower's requirements, and the planned exit strategy.

Lots of people and businesses can use land bridging finance, such as: Property developers: Many developers opt for bridging finance to swiftly acquire land and commence construction. Investors: Bridging finance can be a great option for investors looking to buy land or property for investment purposes. Homebuyers: If you're a homeowner planning to buy land for a new home, you can use bridging finance to fill the gap between selling your current property and purchasing the land. Companies & Businesses: Organisations looking to buy more land, whether next to their current property or in a different area. Auction buyers: Buyers at property auctions often depend on bridging finance to swiftly secure properties.

Lenders have different requirements. But they usually take into account some common factors such as: Borrower's creditworthiness: When it comes to securing a loan, lenders tend to focus more on the worth and potential of the property or land being offered as collateral, rather than just the borrower's credit history. Exit strategy: It's crucial to have a solid and doable repayment plan for the loan. The lender will evaluate how realistic the exit strategy is, like selling the land or property or getting long-term financing through refinancing. Property valuation: When buying a piece of land or property, its value is assessed to determine the loan amount and loan-to-value ratio. Appropriate security: Make sure that the property you're putting up as collateral has enough value and can be sold easily to reduce the risk for the lender.

The time it takes to get land bridging finance can differ based on things like how complicated the transaction is, how prepared the borrower is, and how the lender handles things. Although some lenders might give the green light and provide the funds in just a few days, the whole process can take anywhere from a few weeks to a couple of months. It's a good idea to start the application process early to make sure there's enough time for evaluation and processing.

When you apply for a land bridging loan, lenders usually ask for the following details: Details about the land or property you're buying, such as its location, size, and whether there are any existing planning permissions. Details about personal or company finances, such as earnings, possessions, and debts. The repayment of the loan will be clearly outlined in a plan, which could involve selling the land or property or even refinancing. Relevant documents, such as land or property valuation reports, identification documents, and legal paperwork.

Land that has obtained planning permission for specific uses, like residential, commercial, or industrial development, is known as land with planning. This kind of land is usually more valuable and appealing to lenders and developers. Land without planning permission doesn't have pre-approved development rights. Land without planning permission it can still qualify for bridging finance if the borrower has a viable plan to obtain the required permissions.

There are several fees associated with Land Bridging Finance that you should keep in mind: Broker fee: This fee covers the arrangement of the loan by the broker. Lender facility fee: When the lender provides the lending facility, they may charge a fee. Valuation fees: Obtaining a valuation of your property is crucial in the Land Bridging Finance process. Lender legal costs: As the borrower, you are responsible for covering the lender's legal costs. CHAPS fee: This fee is a standard flat fee that is associated with the Land Bridging Finance process. Exit fees: Some lenders may charge an early exit fee. Redemption administration fee: Completing the loan involves various administrative duties, such as removing the charge over the property. When considering Land Bridging Loans, it's important to be aware of these various fees. Remember, each fee can vary depending on your specific circumstances.

If you're thinking about renting out your property, you'll need a buy-to-let mortgage. Certain conditions you have to meet can vary from lender to lender and might include the following: Your lender might require you to already own your own home, whether you've paid it off completely or still have a mortgage It's important to have a good credit history Show proof of your employment income or earnings from self-employment, separate from the rental income. Usually, this is around £25,000 or more per year. However, even if you earn less than that, there are still lenders who will approve your buy-to-let mortgage Lenders usually have a maximum age limit, which is typically around 75 years old For a buy-to-let mortgage, you'll need a minimum 25% deposit because there's usually a loan-to-value ratio (LTV) limit of at least 75% The amount you can borrow is based on the monthly rental income you're receiving or are likely to receive

But to Let Mortgages in the UK can be used to purchase a wide range of property types like: House’s Flat’s Studios Masionette’s Houses of Multiple Occupancy (HMO) Multi-Unit Freehold Blocks (MUFB) Multiple Properties on 1 Title

Your borrowing limit is based on the expected rental income from the property. Your lender wants to ensure that the rental income will cover your mortgage payments. If the rental value of the property is too low, it could affect the LTV required by the lender, which means you may need a bigger deposit. To determine the potential rent, you can speak with local letting agents or browse online rental listings for similar properties.

To apply for a buy-to-let mortgage you will need: Proof of ID and utility bill from current address. 3 months of pay slips, bank statements, last P60 and/or self-assessment returns (if self-employed) to verify your earnings. Proof of deposit. Details of your solicitor who’ll carry out the transaction. Details of the estate agent you are buying through. Mortgage statement for your existing property or properties. Proof of rental income (usually a letter from an ARLA-regulated agent). Copy of a recent credit report.

Getting an offer with buy-to-let mortgages typically takes about four to six weeks. Once everything is in order, completion usually takes another six to eight weeks, unless there are any issues. However, if your application is more complex, like having bad credit, it may take even longer.

If you're unable to afford a home in your current location, you might want to think about buying an investment property in a more affordable area and renting it out. Getting a buy-to-let mortgage as a first-time buyer can be a bit challenging though, but there a lenders who will consider first-time-buyers.

Stamp Duty If you already own a property in England and Northern Ireland. You'll have to pay an extra 3% on top of the regular stamp duty rates. It's definitely something to keep in mind when considering a buy-to-let investment. Capital Gains Tax If the value of your buy-to-let property goes up by the time you decide to sell it, you might have to pay capital gains tax. It's a good idea to seek independent tax advice to understand how this might affect you and your finances. Income Tax As a landlord, it's important to know that the rent you receive from your rental properties is considered taxable income. This means you may be liable to pay income tax on it. However, there are certain expenses that you can deduct, such as letting agent fees and property maintenance, which can help reduce the amount of tax you have to pay. It's always a good idea to consult with a tax professional to make sure you're taking advantage of all the allowable deductions. Mortgage Interest Income Tax Relief In the past, landlords were able to offset their mortgage interest and buy-to-let mortgage arrangement fees against their income tax bills. This was especially beneficial for those in the higher income brackets, as they could claim up to 45% relief. However, this tax relief was phased out between 2017 and 2020. Now, the relief is capped at 20%. It's important to be aware of this change and adjust your financial plans accordingly. Remember, taxes can be a complex matter, especially when it comes to buy-to-let properties. Seeking independent tax advice can help ensure you're making informed decisions and maximizing your financial benefits.

When investing in a buy-to-let, as well as the costs of buying a house you’ll also need to factor in ongoing fees. These include: Letting agent fees: If you don't want to handle the property yourself, you'll have to shell out for letting agent fees. These fees usually vary from 5% to 15%, depending on whether you opt for a full management service. Another option is to hire a letting agent to search for and screen potential tenants. This can take up quite a bit of time, but by vetting tenants, you can avoid renting to someone who can't afford the rent. Landlord insurance: The price for this will vary based on how big and where your property is, the kind of tenants you have, and the policy you choose. Landlords often need different types of insurance, such as contents insurance, rental protection insurance, public liability insurance, legal expense cover, and insurance for damage caused by tenants. If you have a mortgage, your lender will usually ask you to have a building insurance policy as well. Maintenance: To keep your tenants happy and safeguard your investment, it's important to maintain your property to a high standard.

Being a landlord comes with a wide range of legal responsibilities which include: Contract: Make sure you give your tenant a contract that outlines the rights and duties of both the landlord and tenant. In England and Wales, the most popular kind is an AST (Assured Shorthold Tenancy). This grants tenants the legal entitlement to reside in the property for a specific duration or on a rolling basis. Tenancy Deposit Protection: In case you're renting out a home on an assured shorthold tenancy, don't forget to place your tenant's deposit in a government-approved tenancy deposit scheme. In England and Wales, you can register these deposits with DPS (Deposit Protection Service), TDS (Tenancy Deposit Scheme), or mydeposits. Right To Rent: All landlords in the UK must now ensure that their tenants have the proper right to rent. Landlords need to provide each tenant with a copy of the Government's How to Rent booklet. Gas and Electrics: Make sure to have a gas-safe registered tradesman check your gas appliances annually and provide your tenants with a safety certificate. Remember to give your tenants copies of both the gas and electrical safety certificates. Fire: Make sure your furniture and soft furnishings are fire-safe by checking for fire retardant labels. Don't forget to install fire alarms throughout your home. If you have gas appliances, it's important to also install a carbon monoxide alarm in those rooms. EPCs – what landlords need to know Make sure your property has an updated Energy Performance Certificate (EPC) before you start advertising it, and don't forget to provide a copy to your tenant. Additionally, keep in mind that rental properties must have a minimum EPC rating of E.

These loans, also known as business mortgages, are perfect for medium to long-term investments. You can even use a commercial mortgage to free up capital from an existing building and reinvest it in your business. If you're looking to expand your portfolio, commercial mortgages can also be used to purchase investment properties that can be rented or leased to other businesses.

If your business has gotten too big for the office space you're renting, or if the landlord wants to jack up the rent and make you suffer, you might want to think about buying your own, bigger place. When you buy property or land for your business, you become the proud owner of the place. This means you don't have to fork over money to a landlord every month, and your mortgage payments could be a lot cheaper.

You can use a commercial mortgage to buy any property that generates income. Examples of such properties include shops, offices, retail outlets, industrial units, and restaurants.

There are two main types of commercial mortgages: Owner-occupier mortgages When business owners want to purchase a property to operate their business, they opt for these specific types of commercial mortgages. Commercial investment mortgages If you're looking to buy property as an investment, like for renting it out, there are options available. These options are considered riskier than commercial mortgages for owner-occupiers. You can also opt for a commercial buy-to-let mortgage, which allows you to purchase a property that is already rented out to one or more businesses.

With a business mortgage, you have the option to purchase a suitable space in a convenient location for you and your team. You have the freedom to customize and decorate the space to your liking. And financially, if property prices go up in the area, you'll be the one reaping the benefits. If you ever decide to move to a different location, you can choose to rent out your space to another business and make some extra income.

To secure a mortgage for commercial property, you'll need to put down a larger deposit compared to residential mortgages. This is because commercial properties are considered a higher risk, resulting in higher interest rates and more detailed application processes. However, unlike residential mortgages, there are no set rates for commercial mortgages. Each application is reviewed on its own merits, taking into account the associated risks and the type of business. Businesses with lower risk will typically qualify for better rates, while higher-risk firms may be offered higher interest rates.

Commercial mortgages and residential mortgages share the common goal of financing the purchase of property or land, but they differ in several important ways. Value Commercial mortgages typically have higher property values compared to residential mortgages. Risk When there's more risk involved, lenders tend to require a larger deposit. For commercial mortgages, most lenders will ask for a deposit of 25% to 50%, which means you'll need to find mortgages with a maximum loan-to-value (LTV) of 75% or less. Mortgage term Residential mortgages usually last for around 25 to 30 years, which is pretty standard. However, when it comes to commercial properties, the mortgage term is usually much shorter. It can range anywhere from 1 to 25 years, although a lot of them are limited to 15 years. Semi-commercial mortgages There are loads of different kinds of mixed-use buildings that businesses need, like a pub or shop with a flat on top. You can also find homes that have businesses connected to them, like a B&B, hairdresser, or convenience store. For these kinds of properties that have both a commercial and residential part, you'll need to get a semi-commercial mortgage to finance them.

You can get commercial mortgages in two types: fixed rate and variable rate. If you go for the variable rate, it will be charged at a percentage above either the Bank of England base rate or the London InterBank Offer Rate (LIBOR). Keep in mind that if the tracked rate goes up or down, your mortgage payments will also change. So, make sure you're confident that you can still afford your mortgage payments in this situation.

There are several fees associated with commercial mortgages that you should keep in mind: Broker fee: This fee covers the arrangement of the loan by the broker. Lender facility fee: When the lender provides the lending facility, they may charge a fee. Valuation fees: Obtaining a valuation of your property is crucial in the commercial mortgage process. Lender legal costs: As the borrower, you are responsible for covering the lender's legal costs. CHAPS fee: This fee is a standard flat fee that is associated with the commercial mortgages When considering Commercial mortgages, it's important to be aware of these various fees. Remember, each fee can vary depending on your specific circumstances.

You don't need a flawless credit score, but your credit report will be carefully examined, and the higher your score, the better your chances of getting approved. That's why it's a good idea to review the information that Experian, Equifax, and TransUnion have on you before applying. This way, you can fix any problems that might impact your application.

Even if you've had a rough credit history, don't worry - you can still secure a commercial mortgage. Some lenders offer what's called a "bad credit mortgage" for those with adverse credit and low scores. Keep in mind that the interest rates on these mortgages are typically high and you'll need to make a sizeable down payment. But, if you qualify, you can finally purchase a property and start rebuilding your credit. Plus, once your score improves, you can always refinance to a better deal.

Before applying for a commercial mortgage, it's important to prepare properly if you want to secure the best rates as different lenders specialise in different types of businesses. To ensure a smooth application process, make sure you have all the necessary documentation ready to go. Proof of identity and address (passport or driving licence) 3 to 6 months of personal bank statements 6 months of business bank statements Your current lease or tenancy agreement Business plan detailing how you will repay the loan 3 years of audited or certified financial accounts for your business Assets and liabilities statement Tenant and lease details (if applicable) Property details Details of any likely changes to your future turnover and profit Details of any other investment properties (if applicable) Submitting any proof that can support your case can help your application. It shows the lender that you're serious and saves you time in the process.