Once a market ruled by the high street lenders, newer commercial lenders have developed competitive products that have helped to increase confidence in the market. The addition of respected organisations and banks into the sector has helped to improve the market's image. Fuelled by increasing demand from borrowers eager to capitalise on the booming business investment market, commercial mortgage lenders have had to put their heads together to innovate and develop products to suit the specific needs and circumstances of a growing business market. When contemplating a commercial mortgage the process can appear complicated and confusing. After all you are embarking on one of the biggest business choices you will ever make.
Building a solid foundation of knowledge about the commercial mortgage borrowing process is important. Here are some steps to consider when you start looking:
Don’t expect that if you have a bad credit rating the only way to get a commercial mortgage is to pay a high price. If your credit report contains negative information that is accurate but stemming from unique circumstances such as illness or temporary cash-flow problems, be sure to explain your situation to the lender or broker. If you have a low credit rating, or a bad credit history don’t assume that your options are restricted to high-cost lenders. If there is inaccurate information in your personal or commercial credit report, you’ve the right to dispute it and have it removed.
A business loan often involves many fees, such as administrative fees, broker fees, transaction fees, early repayment charges, and third party costs such as valuation and legal fees. The lender or broker must give you an estimate of the fees payable when you apply for a commercial loan. Many of these fees are negotiable. Loan to Values (LTV’s), interest rates, arrangement fees, and early settlement charges can all turn a loan that looks good at first glance into something else once all the facts are known. When comparing business loans, make sure you’re reviewing the same information in each mortgage such as loan amount, loan term, monthly re-payment, early settlement charges and annual percentage rate (APR).
A business mortgage broker will help you find the right business lender for your circumstances, although it is always worth talking to your bank too because they know your company better than almost anyone. A commercial loan brokerage is a firm that acts as a broker arranging business mortgages, property development finance and bridging finance. Because of the complex nature of the commercial mortgage market company owners may approach a mortgage broker or financial adviser to help them source an appropriate lender.