Commercial Property Mortgage

[rufmeister]

We need to move on from our currently rented warehouse unit, and we have been offered the chance to buy a rarely available warehouse unit.

Having never given it a thought regarding being able to purchase one, what are the criteria and where do you go to speak to someone regarding a mortgage on a warehouse type of building?

We don't have enough in a SIP to purchase that way yet if that makes a difference.

We would have around 20% deposit, could get more if needed.

Can't really find any info online as I may be using incorrect search terms as I keep getting BTL mortgage info.

[loafer123]

rufmeister said:

We need to move on from our currently rented warehouse unit, and we have been offered the chance to buy a rarely available warehouse unit.

Having never given it a thought regarding being able to purchase one, what are the criteria and where do you go to speak to someone regarding a mortgage on a warehouse type of building?

We don't have enough in a SIP to purchase that way yet if that makes a difference.

We would have around 20% deposit, could get more if needed.

Can't really find any info online as I may be using incorrect search terms as I keep getting BTL mortgage info.

Ideally, speak to your bank - it is a relationship lend.

You should expect leverage of ~50% in my view, but other views are available...

[rufmeister]

loafer123 said:

Ideally, speak to your bank - it is a relationship lend.

You should expect leverage of ~50% in my view, but other views are available...

What do you mean by that?

[J012E]

Commercial mortgages would need a higher deposit essentially. At a minimum you'd want to start at 30% but there have been some down valuations recently and lenders are on some occasions asking for higher loan to values.

PM me if you have any questions. I run a resi/commercial mortgage broker firm.

[seaninog]

It's going to be all about your profitability. If you can show good profits over the last three years then High Street banks will be interested (well, those that are still taking new business at the moment as many are not). If your affordability argument is less compelling then you move to Challenger banks and other near-prime lenders that will charge a slightly higher interest rate.

Deposit will need to be at least 30% as already stated (probably need to be 35% in all likelihood) but the big focus will be on profits/EBITDA.

[rufmeister]

Thanks all, will speak to the bank today.

[loafer123]

rufmeister said:

Thanks all, will speak to the bank today.

One option might be to create a decent lease between the operating company and the property owning company (OpCo/PropCo) which enables the bank to value the property on an investment basis and provide better leverage, and then to hold the property via the SIPP.