Commercial property mortgages are the easiest way to acquire or extend the premises for your business. It often happens that those looking for commercial property mortgages go and enquire at their bank. If you have a good relationship with your bank and have been in the habit of using them for business and financial advice, this may seem the obvious place to start.
However, there are a number of reasons why you could actually find it much more advantageous to go via a broker and shop for your mortgage on the open market.
Banks have very rigid acceptance criteria. If you are a new business, or have other reasons why you can’t produce an impeccable track record, the bank could turn you down. This could damage your chances of being accepted elsewhere.
Banks usually only have a limited range of products.
Banks are target-driven. The finance a bank provides is likely to be on terms that are advantageous to the bank, rather than to the business customer. You could find yourself paying higher arrangement fees, larger deposits and less favourable interest rates. Also, the maximum loan term could well be shorter. If you look to the open market, lenders are in competition with each other and you can usually negotiate much better terms.
In the open market it is possible to find specialist lenders who specialise in particular sectors of the market. You will almost certainly find a lender for your sector whatever it may be.
By searching in the open market you are likely to be able to find lenders offering “non-status” mortgages which don’t require three years’ accounts, accountant’s certificate.
If you use the open market, you can borrow funds from more than one source. If you have all your eggs in one basket, as you would if you borrowed via the bank, you are vulnerable to foreclosures if the bank suddenly takes against a particular sector.
If you are an established business, it may have become a habit with you to approach your bank for what you need. The idea of looking elsewhere for your commercial property mortgage may not have occurred to you. If you are open to alternative possibilities, you could find there are all sorts of advantages. Find a commercial mortgage broker and see what is on offer.
Please note that the FSA do not regulate commercial loans or commercial mortgages.