COMMERCIAL MORTGAGE

[Birkin1932]

Buying an additional factory in the new year, its in a great location and costing around £450k.

Its been ten years since I have needed bank finance, I assume things have changed big time

If I was say putting £150k into the purchase, what sort of interest rate would I be expecting to pay?

I was thinking over 15 years but with the facility to pay down in chunks

We are a limited company with good profit history and no debt

Comments please

Thanks in advance

Edited by Birkin1932 on Sunday 23 December 22:00

[PurpleMoonlight]

Around 4% above base rate.

[blueg33]

As above. I get LIBOR plus 4 percent. Geared up to 65/70 percent

[Birkin1932]

Thought so, whats worrying me is a move back to 4/5 % somewhere over the life of the loan, 9% plus would be a right ball ache.

I suppose there is no way I'd get a fixed term loan instead of a mortgage at say around 5.5 or 6 % ?

[PurpleMoonlight]

Not for that term you won't.

Don't suppose you have a sizable pension scheme? That could buy the property or assist in the purchase perhaps.

[HoHoHo]

Wow - when I bought our offices 6 years ago we negociated 1% above base for the life of the mortgage (12 years) with ability to overpay if I wanted to and with only a 10% deposit.

Shows how times have changed.

[Birkin1932]

I was looking at the paperwork of our last mortgage 9 years ago and it was 1.25% above base. Some amazing changes happened over the last 4 years, until its fixed the country will get nowhere.

Still waiting for my bank to get back to me, we are a good client, I feel like we have been put on the naughty step for asking for money

[HoHoHo]

We have banked with HSBC for may years and have had little or no contact for as long as I can remember (my commercial mortgage is with RBS).

I've had significantly more contact with RBS who want our business banking and the rep was suggesting money is there but the criteria to lend is so strict they are finding it very difficult to approve loans/commercial mortgages.

Rates are sky high as well, not anywhere near those we have currently.

[2 5HAN]

We bank with Lloyds Commercial for our business accounts and we have 15 and 20 year fixed rate and term loans

Not sure who you bank with but have a chat with your manager, we chose fixed rates as this was our concern, rates eventually working their way back up to 4/5/6%

Also as mentioned do you have a decent Pension you could start a SIPP with?

[Birkin1932]

I bank with HSBC, I don't think I've met our manager in the last 5 years. I already have a significant property portfolio within a trust

I want this loan within the ltd company to keep things easier with future planned exit from this business.

I am going to push for a fixed term as I can see inflation 5 or 6 years down the line and if they sell mortgages at 5% above base possibly another property crash !

Thanks all for your input and happy christmas

[RYH64E]

I got base plus 2.86% with a £2500 cash back on a commercial mortgage in December, from Barclays.

[Birkin1932]

That's more like it, I would pay the cash back straight off the principle.

[jayxx83]

I have a very good contact at Barclays commercial. Soho based but can get a local business manager to write the deal wherever you are in the country.

[Birkin1932]

Thanks for that I am waiting on HSBC and RBS so hopefully should get a deal.

[4lf4-155]

For that level of gearing you should be aiming for 2.5-3% abr.

If you are in contact with rbs ask about funding for lending. (Discounted margin, no fees)

They have done more of this than any othe bank.

[Birkin1932]

Thanks for that, expecting an answer next week with holidays etc.