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Guest post by: Chris Clarke Become an Author

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The role of the commercial mortgage broker in the UK has dramatically
changed recently, largely because the commercial mortgage market is
thriving. There are more commercial properties being sold and re-
mortgaged every month than at any other time in recent history. This
growth in the commercial mortgage sector is being fuelled by low
interest rates and attractive rental yields across a very broad
spectrum of property types.
One of the first things a commercial mortgage broker will want to
establish is whether the property in question is for owner occupation
or for investment. This is because the methods of underwriting the
two different types of property are very different.
When acquiring a commercial property for owner occupation the borrower
will need to produce all the usual supporting documentation such as
accounts, business plan and guarantees. There are options to self-
certify the affordability for a commercial mortgage but the
disproportionately higher interest rates can mean that this should be
the last option. It is because of these differences in pricing
between a full-status and a self cert commercial mortgage that using a
commercial mortgage broker has become so important.
The amount of rent which a commercial property will achieve can be
quite difficult to estimate. The surveyor will attempt to compare
similar properties in order to arrive at the market rent. However, if
you consider the variety of commercial properties you will appreciate
that this can be very difficult to calculate.
It is the market rent which will dictate how much a borrower will be
able to raise on a commercial mortgage. Market rental can be affected
by the availability of other similar commercial property in immediate
area, but also the suitability of the subject property for a wide
variety of roles.
It is the job of a commercial mortgage broker to consider all the
relevant factors and subsequently recommend the most suitable
commercial lender. The lender will then look at the borrowers credit
history, the rental income and property type before accepting the
application.
It should be remembered that commercial leases are very different to
residential ones. Residential buy to let leases are known as Assured
Short-hold tenancies (AST's). These are well documented and supported
in law. Commercial leases require much more thought.
The most obvious difference is that a commercial buy to let property
will normally be let out for between 3 and 6 years with the tenant
usually being responsible for the upkeep of the building. Having
significantly longer leases is one of the attractions of commercial
buy to let property, however the downside is that when empty it can
take several months to find a new tenant.
In a perfect world the commercial mortgage broker would be able to
place every commercial investment application with a bank or building
society. This is because they offer the most competitive rates and
favourable arrangement fees of all the commercial lenders. The down
side is that banks and building societies tend to be more cautious and
will consider all applications very carefully. The LTV's offered by
banks for commercial buy to let mortgages tend to around 75% with
rates as low as .9% over bank base.
The other option is to use a specialist commercial property lender,
although more flexible these lenders are much more expensive. LTV's
can be as high as 85% but the rates can easily creep into double
figures, these lenders also charge high arrangement fees and early
redemption charges. The specialist commercial lenders will normally
only deal with a commercial mortgage broker and not the borrower.
Find out more about how a commercial mortgage broker can help arrange finance for commercial properties. Spectrum Business Finance have been arranging commercial mortgages for over 5 years and have the experience to find solutions
to fit most circumstances.

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