Mortgage for a mancave
Discussion
I'm looking to purchase a small former factory building a stone's throw from my house to use as a garage/workshop/storage etc. It's currently owned by a double glazing firm that has other premises elsewhere, and has been shuttered since 2020. Purchase price will be <£100k.
It's registered as B1, and won't be my residence (maybe in the future), so I can't get a 'conventional' residential mortgage.
Any suggestions for mortgage lenders/brokers that might be able to handle such a purchase?
It's registered as B1, and won't be my residence (maybe in the future), so I can't get a 'conventional' residential mortgage.
Any suggestions for mortgage lenders/brokers that might be able to handle such a purchase?
Caddyshack said:
It will be quite a tough one.
Most normal mortgage brokers will not specialise in this.
I would certainly expect 25% to 40% deposit requirement. Most banks will be set up to expect a rental income so will not particularly like the "man cave" bit. They will want to see that it is affordable.
If you have the income and equity I would explore a further advance or secured loan on your current residential first even if this is for some of it as I would expect the commercial costs to be around 8% or more.
I had a client do well with Barclays commercial recently for a plot of land used for raising game birds - no house on there.
I would not mention anything about future habitability , that will just muddy the waters.
Many commercial lenders only want loans of 500k+
I do residential mortgages, I try not to get involved in commercial so someone more in that market may give better advice.
Affordability isn't an issue, nor is deposit. Further advance wouldn't work as the property is a) >60% mortgaged and b) worth even less!Most normal mortgage brokers will not specialise in this.
I would certainly expect 25% to 40% deposit requirement. Most banks will be set up to expect a rental income so will not particularly like the "man cave" bit. They will want to see that it is affordable.
If you have the income and equity I would explore a further advance or secured loan on your current residential first even if this is for some of it as I would expect the commercial costs to be around 8% or more.
I had a client do well with Barclays commercial recently for a plot of land used for raising game birds - no house on there.
I would not mention anything about future habitability , that will just muddy the waters.
Many commercial lenders only want loans of 500k+
I do residential mortgages, I try not to get involved in commercial so someone more in that market may give better advice.
Caddyshack said:
Greater than 60% would not be an issue, most lenders will be ok up to 80% and some above, what they need is head room to lend more I.e. you need 75k equity within the required ltv to allow it to release enough.
I didn’t mean your ability to pay when I mentioned affordability, I meant the model that the lender uses to satisfy affordability which is based on how they view your income, outgoings and a stress test applied to that.
Most commercial deals work on a business plan type approach of how will the mortgage be paid and then how you would afford to pay it should that plan not work our so it doesn’t exactly fit your spec for a man cave.
Yes, that's what I meant. The proposed mancave purchase price is more than my home is worth. If they lent enough on that, they'd be at ~140% LTV!I didn’t mean your ability to pay when I mentioned affordability, I meant the model that the lender uses to satisfy affordability which is based on how they view your income, outgoings and a stress test applied to that.
Most commercial deals work on a business plan type approach of how will the mortgage be paid and then how you would afford to pay it should that plan not work our so it doesn’t exactly fit your spec for a man cave.
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