How Do I Get a 100 Per Cent Commercial Mortgage Loan?

If you are looking for a commercial mortgage loan, this could be for a number of reasons. You could be looking to expand your business, purchase new premises, or replace your equipment.

When you look into the possibilities of obtaining a commercial mortgage loan, you may find that the maximum you can borrow is 85% of the purchase price. This may fill you with dismay, especially if you are a small or medium-sized business. You may feel you have no prospect of raising the other 15%.

Until recently it was difficult or impossible to obtain a full 100% for a commercial mortgage loan. However, more recently some specialist lenders have come into the market who are willing to consider 100% loans.

So how do you go about looking for a 100% commercial mortgage loan?

First of all, approach a commercial mortgage broker and ask to be put in touch with a specialist lender. You are unlikely to find one of these through your bank.
The lender will discuss with you what kind of security or collateral you are able to offer in lieu of the cash deposit. A common type of collateral to be offered is residential or commercial property. This is fine, provided of course that there is equity in the property.
The most attractive type of security is land with a realisable value. This generally means land with planning consent, or at least capability of development.
Remember that the costs of a 100% commercial mortgage loan are usually greater than those for a loan with a lower loan-to-value. For example there are likely to be extra legal and valuation costs. These costs can of course be added to the mortgage.
You need to be very aware of the risks of entering into this type of arrangement. Take careful financial advice, obtain an audit of your business and double check your business plan. All business involves some risk, but make sure it is a calculated risk and that your project is well thought out.

Nowadays it is by no means impossible to obtain a 100% commercial mortgage loan. Just make sure you take the right advice and that you are as certain as you can be of the viability of your project. The security you are putting up is a lot to lose.

Please note that the FSA do not regulate commercial loans or commercial mortgages

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