Almas Uddin
Founder and Mortgage Advisor
15 Apr 2020
Securing a Long-Term Commercial Mortgage
Generally, mortgage offers to purchase a residential property come with terms of 25-30 years, but commercial mortgage terms tend to be much shorter at only 5-10 years.
The mortgage products provided by commercial lenders are called committed facilities, which are calculated on a short-term loan basis but analysed for affordability based on the monthly repayments required over a longer repayment term of around 25 years. This identifies lower monthly repayments that most businesses will be better able to afford, and means that the lender can achieve their requisite debt service cover requirements.
Many business borrowers are not aware of the commitment period, and therefore have a shock at the end of the short-term loan period when the demand arrives for the outstanding balance!
Revolution Finance Brokers have experienced this scenario many times and would recommend at this stage to refinance and look around the market for the best offers. It is ideal to begin considering options before the end of the initial term, so if you are reaching this date then give us a call and we can start work now.
Choosing a Lender
Refinancing a Commercial Mortgage Through your Existing Lender
Most lenders offer incentives to keep your business with them:
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Lower arrangement fees – remortgaging with the same lender usually carries lower fees, and we may even be able to negotiate zero arrangement fees
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Valuation requirements – to remortgage an existing property, a new valuation may not be required
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Additional fees – other costs such as legal or security fees are usually not necessary
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Streamlined process – it is often quicker and easier to remortgage with the same lender
Refinancing a Commercial Mortgage with a New Lender
Comparing your remortgage offer with others on the market is always advisable – even if just to make sure you are getting a good deal! Other lenders might be able to offer:
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Favourable terms – lending terms change over time, and even if your existing lender was the best option when the mortgage term began, there may now be other products available
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Cost savings – although the initial fees may be lower to refinance with the same lender, you might be able to save more money by choosing a lower-cost long-term product
How to Apply
If your business is having to consider refinancing its mortgage, is approaching the end of your committed facility period, or would like to check whether there are better deals available, give us a call today at 0330 304 3040.
Contact us now to discuss your personal options, Revolution Finance Brokers specialise in commercial and residential finance in Essex, Kent, London and Hertfordshire.
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