Q & A

[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% - 85% 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 secondary 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 50% of purchase price.  The loan to value on these types of purchases are low as it is deemed to be unsecured lending.
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 sub-prime lending in the commercial mortgage sector?
[A]
Sub prime lending can cover several areas, such as a client with adverse credit, a start up business with no accounts, or an existing trading business where the accounts do not show sufficient net profit, or where the type of business or commercial property is not acceptable to main stream commercial lenders.  With sub prime or non status commercial lenders, interest rate margins could be between 2% - 5% higher than for full status commercial mortgages.

[Q]
Do commercial lenders offer interest only commercial mortgages for the full term of loan?
[A]
Most commercial lenders will offer an interest only period for the first 3 – 5 years of the loan which will then revert back to capital and interest for the remaining period of up to 25 – 30 years maximum.  Some commercial lenders will offer an interest only period for 50% of the loan with the other 50% on a repayment basis and some non-status commercial lenders will offer an interest only period for the full term of the loan of 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 via a long term commercial lender. Typically bridging lenders will offer a 1 - 6 month term and usually only require a satisfactory valuation on the property in order to proceed to completion.

[Q]
Are there any other areas on bridging finance we should look out for?
[A]
Yes, bridging finance is expensive with typical rates of between 1% - 1.5% per month (annual rate 12% - 15%) with no early penalty redemptions during the term of the loan.

[Q]
I have heard it is possible to obtain up to 100% funding on development finance.  Is this true?
[A]
Yes, in certain circumstances it is possible to raise up to 100% funding for development, which will include the site purchase, build costs, professional fees and interest roll up.  However, where 100% finance is required interest rates can be as high as 2% per month (annual rate 24%) for the term of the development loan, which is typically up to 12 months.

[Q]
How can we achieve lower interest rates for development finance?
[A]
If you can provide a minimum deposit of between 25% - 30% of the site cost it may be possible to arrange 100% of build costs, to include profession fees and interest roll up with interest rates ranging from 2% - 4% above bank base.

contact us

Head Office Address

Colonial House, 181-185 Stratford Road, Shirley, Solihull, West Midlands B90 3AU

Telephone

0121 744 4505

Fax

0121 733 6049

Email

info@carlton.uk.com