What is Commercial Investment Finance?
Here is a quick explanation of what commercial investment finance is and how it works.
A Commercial Investment mortgage is…
…a type of loan used to purchase or refinance a commercial or semi commercial property which is let to tenants.
The rates and fees charged are generally slightly higher than those charged where the property is owner-occupied.
They are the commercial counterpart to residential buy-to-let mortgages and work in a very similar way. There are a few main factors used when assessing an application, they revolve around the applicant, the property and the lease.
An applicants credit history, financial position and experience of letting both residential and commercial property is checked and must meet the lenders criteria.
A strong property is one that has a reasonable level of demand for letting or sales (in case a tenant is lost, or the property has to be sold). The surveyor will base their report on these factors and this forms a large part of the decision to lend.
A strong lease is one with a term of at least a few years remaining, to a financially robust tenant. The strength of the tenant is as important as the lease terms, as a tenant who is at risk of financial collapse will not be considered a reliable source of income.
