What you need to think about when considering a Commercial Mortgage

Posted by Mark Chandler on May 21, 2020 2:31:48 PM
Mark Chandler

Commercial mortgages are available to a wide variety of businesses, from sole traders to limited companies. They are a very versatile method of raising funds for property purchase, property refurbishment and capital restructuring.The lending criteria will be based on the ability of the business to service the loan repayments, which is aligned to the profitability and cash flow of the company. Ideally, most banks and Finance Houses will look for a two times services coverage of the loan repayment, but in certain circumstances this can be relaxed. 

Four things to think about when considering a commercial mortgage

1.Can your business cover the cost?

This first point is an important one.When calculating this, think about the current rent that you are paying and whether a commercial mortgage will help to reduce this burden. Examine your business plan to forecast what the growth projection holds.

2.Title Issues

Title issues are an area of law that can be challenging to comprehend. Thankfully, Land Registry has now digitised this service, so it is straightforward to get a clear picture of your proposed property and obligations. Make sure that you and your solicitor establish:

Where the legal boundaries are, and whether there are any on-going disputes with neighbours

Whether the property is a leasehold or a freehold


Non-adopted roads (you maybe responsible for the upkeep of any roads that are not council owned)

Ground rents

Environmental factors

3.Environmental factors

Environmental factors can have an influence on certain types of property. If your land has been used for industrial purposes in the past, it will need testing to achieve a clean bill of health before your project can go ahead. Or you may incur considerable expense in cleaning up your property and maybe those around it.

4.Choosing a solicitor

Choose your solicitor wisely. Commercial property mortgages can be highly complex, and inexperienced solicitors may not anticipate all of the intricacies. This means that an enticing quote can escalate, and good deals can be lost. When it comes to commercial mortgages, experience counts.

We’re here to help

In this industry, experience matters and "the devil is in the detail”. What we at BFS (UK) Limited seek to do, with our numerous years of experience, is pre-empt to ensure that you are not embarking on an expensive project. One that is doomed to failure due to an issue that should have been glaring from the outset.

Our experience is drawn from many different financial disciplines, from strategic economics to property law. This means that we have a rounded and informed approach that is grounded in decades of experience.Want to know more?Contact us today to talk to one of our property finance experts.


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