The owner-occupied commercial mortgage market has evolved since the days when a client’s only options were their own clearing bank or one of the other main ones. These offered similar terms, would only lend if the deal was squeaky clean, charged hefty arrangement fees, and often annual renewal fees too. The entry of building societies, specialist commercial lenders and, more recently, non-status and self-cert lenders has not only given clients more choice but also fuelled competition.This has resulted in the availability of loans at higher LTVs, more competitive rates and fees and add-on options like interest-only periods, offset facilities and seasonal repayment options. It’s now not unusual for quality applicants with good accounting information available to get 85% LTV. From offices to factories to warehouses and retail properties, clients now have a variety of lending sources available to them. So clients assess the options to ensure they have a funding package that meets their requirements. These days it is unusual for a client with strong background information to pay more than 2% above base. Very often, especially where the client employs the services of a quality commercial broker to negotiate on their behalf, rates are well below this level. Even for trading-related properties such as public houses, care homes, nurseries and the like, funds are more widely available and clients can often borrow up to 80% of what is known as the going concern valuation of the business, normally subject to a maximum of 100% of the underlying bricks and mortar valuation. Rates and terms can be highly competitive as long as the deal is structured properly and submitted to the right lender. For those clients who do not have accounts available or whose accounts may not be strong enough for the options above, the entry to the market of non-status lenders has created opportunities. I’ll go into non-status lending in more detail at a later date but suffice to say there has never been a better time to get involved in the commercial market. There are facilities available to suit the vast majority of clients’ needs. The wider range of options means conversion rates are generally much higher and the amount of wasted time on cases that will never complete has been substantially reduced. Make sure you don’t miss out on these opportunities with your clients.andy young
Last week I discussed clients buying premises via their pension funds. Of course, not everyone is fortunate enough to have sufficient resources to purchase business premises but there are now more opportunities than ever for business people to raise commercial finance to buy premises for their own business use.