What is a Commercial Mortgage Broker and What do They do?
A commercial mortgage broker is a professional that works with business owners to help them arrange a commercial mortgage. This type of mortgage is unique and often has different terms than a residential mortgage. A good broker will know the ins and outs of the commercial mortgage market and can help you get the most suitable deal possible on your commercial mortgage. They can also assist with the application process, making it easier for you to get approved.
What Does a Commercial Mortgage Broker do?
Commercial mortgage brokers work with business owners to help them secure a commercial mortgage. This mortgage is used to purchase or refinance a commercial property, such as an office building, warehouse, or retail space. A good broker will deeply understand the commercial mortgage market, the lenders criteria and how best to present your application making it easier for you to be approved.
How can a commercial mortgage advisor help me?
A commercial mortgage broker can help you in several ways:
They can help you understand the retail mortgage market and what options are available to you.
They can advise you of lenders appetite to lend on certain commercial properties i.e. retail shops to Car garages to office blocks.
They can help you get the most suitable terms possible on your mortgage. Yes the rate is important, but so is the overall mortgage package i.e. term / deposit / arrangement fees / redemption fees etc. Your commercial advisor can guide you through these.
They can save you time. As a business owner you probably never have enough time in the day, so use a commercial broker to source you a mortgage.
When Should I use a Commercial Mortgage Broker?
You should use a commercial mortgage broker when considering taking out a mortgage to purchase or refinance a commercial property. The earlier you speak with a broker the better as these applications can take time to pre-pare and be signed off by lenders, when compared to residential mortgages.
If you are ready to start shopping for a commercial mortgage, then it’s time to find a broker.
What is a Commercial Mortgage used for?
A commercial mortgage can be used to purchase or refinance a variety of assets such as office buildings, warehouses, retail space, hotels, restaurants, and manufacturing facilities.
Are Commercial Mortgages More Expensive?
Commercial mortgage rates are typically higher than residential mortgage rates. This is because commercial properties are considered to be a higher risk than residential properties. As such, lenders charge higher interest rates to offset the increased risk.
What are the Terms of a Commercial Mortgage?
The terms of a commercial mortgage can vary depending on the loan amount, the asset, and the borrower. However, most commercial mortgages have a term of 5 to 25 years and you can have them on a repayment or interest only basis.
What is the Difference Between Commercial and Residential Mortgage?
Commercial mortgage rates are typically higher than residential mortgage rates as they are considered higher risk additionally lenders require you to put down at least a 25% deposit. The fees associated with commercial mortgages for a valuation report, or the lender arrangement fee are also generally higher than a residential mortgage.
What are Some Things to Consider Before Getting a Commercial Mortgage?
Before you get a commercial mortgage, you should consider a few things:
You must ensure you are eligible for a commercial mortgage.
You need to decide how much you can afford to borrow.
You need to shop around and compare rates from different lenders.
What Documents Would be Needed for a Commercial Mortgage?
Typical documents needed for an application are:
Credit Report – A report from either Experian or Equifax would be needed.
Accounts – Last 3 years accounts is ideal. If you have only been trading 1 year there are lenders available who will accept only 1 years trading accounts.
Proof of Identity – this would be a copy of your passport &/or Driving License
Proof of Deposit – Evidence of the deposit and details of how this has been generated, if you are buying.
Bank Statements – Last 3 months business bank statements.
The lender will always have their own documentation to be completed and can request further information to satisfy
their underwriting requirements.
What is the Process of Working with a Commercial Mortgage Broker?
The process of working with a commercial mortgage broker is as follows:
You contact the broker and discuss your needs.
The broker will assess your eligibility and provide you with a list of options.
You compare rates and terms from different lenders and choose the one that best suits your needs.
Documents will be requested and the broker will assist you with the application process.
Once approved, you will receive the loan and begin making payments.
How to Find the Best Commercial Mortgage Broker for Your Needs?
You should consider a few things when finding the best commercial mortgage broker for your needs, including:
Ensure that the broker is licensed and experienced.
Ask for referrals from friends or family.
Compare rates and terms from different brokers.
Check out reviews online.
Also, feel free to ask businesses like us for guidance in determining the leading commercial broker for your needs and requirements.
What are Some Tips for Working with a Commercial Mortgage Broker?
Some tips for working with a commercial mortgage broker include:
Be clear about what you want and need from the loan.
Make sure you are eligible for a commercial mortgage.
Shop around and compare rates from different brokers.
Read reviews online before choosing a broker.
Make sure the broker is licensed and experienced.
How to Explore Your Commercial Mortgage Options with The Money Hub
If you are looking into taking out a commercial mortgage, but don’t have the time or energy to research the market yourself, Thankfully, help is at hand.
Call The Moneyhub Limited on 0203 725 5830 and speak to one of our highly specialised and dedicated Commercial Mortgage Advisors or you can complete an enquiry form which will allow you to schedule a call time.
There are some reasons why you should use a commercial mortgage broker. First, they can help you save time by doing the legwork. Second, they can help you get the best terms possible on your loan. Third, they can assist with the application process, making it easier for you to get approved.
To qualify for a high street lender you will generally need a good credit profile and score (you can find this out by viewing your credit report with Experian or Equifax), however there are specialist lenders available through commercial mortgage brokers who don’t credit score applications and they do accept levels of bad credit being registered such as missed payments, defaults etc. Speak with a broker to confirm your options.