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Commercial Mortgage

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nature's child

Joined: 14 Aug 2005
Posts: 194
Location: Midlands

Posted: Wed Aug 31, 05 7:36 pm Post subject: Commercial Mortgage

Having just found the most ideal property, meeting all of the requirements that we have, I'm having trouble finding someone who will lend against it.

I've spoken to the usual banks etc, my own building society don't want to know (as it means I'm not in paid employment for a while).

Please does anyone have any information on sensible lenders. I do currently own my home but do not want to sell just rent it out for the time being, therefore I need to borrow approximately 100% of the new holding.

Many thanks

Denise

tahir

Joined: 28 Oct 2004
Posts: 45676
Location: Essex

Posted: Wed Aug 31, 05 8:03 pm Post subject:
What are your plans for the new venture, are they green at all? If so the Ecology building society might be able to help

Treacodactyl
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 25795
Location: Jumping on the bandwagon of opportunism

Posted: Wed Aug 31, 05 8:12 pm Post subject:
Could you not raise any capital against your current property? If you've had it a while it should have gone up in value and could be remortgaged. Obviously do your sums first to ensure you don't lose the lot.

nature's child

Joined: 14 Aug 2005
Posts: 194
Location: Midlands

Posted: Wed Aug 31, 05 8:22 pm Post subject:

I could raise money against my current property, but it will still leave me with a large amount to borrow. Basically I have about 60K equity, the property I'm looking at is 395K (so you see my problem).

There is an income from the property with 3 available holiday lets but how do you get the lenders to take this into consideration? We also plan to make part of the land into a camp site (small but beautiful) and also a fishing lake. There are other buildings all with planning permission to convert into holiday lets so the potential for a thriving business is there.

It would also enable us to live the small holding/downsizer life that we have been preparing for.

I have prepared an outlined business plan with all the figures but can not get any of the normal high street lenders to consider the venture.

Getting totally frustrated at this point, where's my fairy godmother with her magic wand when I need her!!!

barefoot_boo

Joined: 06 Aug 2005
Posts: 399
Location: Wiltshire

Posted: Wed Aug 31, 05 8:59 pm Post subject:
As the new place will effectively earn its keep as a business, get a commercial mortage? Check out moneysupermarket and maybe businesslink for advice.

wellington womble

Joined: 08 Nov 2004
Posts: 15051
Location: East Midlands

Posted: Wed Aug 31, 05 9:16 pm Post subject:

you need a business mortgage, not a personal one (you probably already knew that, though...) Ours came from northern rock, and more recently paragon, although they both required 20 percent deposits on a buy to let. They will also cetainly want to see accounts and a business plan. Banks went through a phase of having small business advisors, if they're still around they might be able to help. A freindly solicitor might be able to point you in the right direction, or the CAB may know someone who advises on buinesses.

Alison might know of someone - she's got a B and B, but I suspect she'd putting her feet after her busiest week of the year last week! She'll be along sooner or later though.

alison
Downsizer Moderator

Joined: 29 Oct 2004
Posts: 12918
Location: North Devon

Posted: Wed Aug 31, 05 9:50 pm Post subject:
We got our business loan through the Nat West. We got our introduction to the manager from the accountant, who we met via business link! Try a local branch to where you want to move to and ask to speek to the businss manager. Ours is great.

nature's child

Joined: 14 Aug 2005
Posts: 194
Location: Midlands

Posted: Thu Sep 01, 05 6:41 am Post subject:
Thanks for all the advice everyone, will start again today from the different angles. Not prepared to give up on this one it's everything we've been looking for and it has all the ticks in the right boxes.

Will

Joined: 30 Jun 2005
Posts: 571
Location: Grenoside, Sheffield

Posted: Thu Sep 01, 05 7:53 am Post subject:

As a couple of others have suggested, you may well be better off with a commercial mortgage. These take into account the earnings of the business, not individual. Arrangement fees are often higher though.

If you let me have the postcode of the property I can check whether there might be any grants or other support available in your area. Quite a few of the RDAs run subsidised business advice schemes.

Business Link is also a good bet.

For any of this stuff, a good business plan is essential - it doesn't have to be flash, but there is certain information which any lender will expect to see. I can let you have a template if you like.

Will

twoscoops

Joined: 28 Oct 2004
Posts: 1924
Location: Warwickshire

Posted: Thu Sep 01, 05 8:29 am Post subject:

I suspect that many lenders won�t take you seriously as you have a property but you don�t want to sell it so are looking for 100% finance. They will be wondering why they should take the risk while you keep your house. They will more than likely be much more open to discuss it if you realize the equity in your house and use it as a deposit. Obviously I don�t know your circumstances but keeping the house to rent out may not bring you the income you expect, so if the smallholding/holiday lets are your life�s dream then it would make sense to throw your lot into it, providing you can demonstrate that you can cover the payments. Lenders don�t expect every business to make a profit in its first year, but as long as it almost covers its costs, and you have an overdraft to help with cashflow, you will find it much easier to find a lender willing to do business if you are seen to be taking a risk yourself.

wellington womble

Joined: 08 Nov 2004
Posts: 15051
Location: East Midlands

Posted: Thu Sep 01, 05 9:46 am Post subject:
They might agree to lend against the property you have though, as that gives them good security against the risk, whereas if you throw the whole lot in, and (god forbid!) go bust, they're stuffed as well as you. You'll get better mortgage rates if you have a deposit in, though. I'd be interested in the template, will - I'll PM you.

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