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An Introduction to Commercial mortgages

Once a market ruled by the high street banks, newer banks have developed competitive products that have helped to increase confidence in the market. The addition of respected organisations and banks into the sector has helped to improve the market's image. When considering a business loan the process can appear overwhelming and complicated. After all you are embarking on one of the biggest business choices you will ever tackle. All to often company directors  are of the opinion that they need money quickly and enter into commercial loan contracts without fully understanding how much they are paying in interest, arrangement fees or other costs.

Building a solid foundation of knowledge about the business loan borrowing process is important. Here are some things to consider when you start on your journey:

• If you have a bad credit history prepare a explanation of what happened including dates and amounts of money.
• Prior to applying for a commercial loan try to find out as much as possible about what’s obtainable in the market place.
• Make enquiries about your credit history and fix any blemishes on your credit file before you apply for a commercial loan.
• Gather all the relevant documentation about your business finances.

Have you got a Bad Credit History?

If there is inaccurate information in your personal or commercial credit report, you’ve the right to dispute it and have it removed. Don’t anticipate that if you have a bad credit rating the only way to get a business mortgage is to pay a high price. If you have a low credit rating, or a bad credit history don’t expect that your options are limited to high-cost banks. Whether you have a bad credit history or not, it’s a good idea to review your business’s credit report for accuracy and completeness prior to applying for a commercial loan.

Charges, Fees and Interest Rates

The lender or broker must give you an estimate of the fees payable when you are applying for for a business loan. Many of these fees are negotiable. Knowing the amount of the monthly payment or the interest rate is not enough. Be sure to get information about potential commercial mortgages from several banks or finance brokers and find out all of the costs involved with the loan. Loan to Values (LTV’s), interest rates, arrangement fees, and early repayment charges can all turn a loan that looks good at first glance into something else once all the facts are known. When comparing business mortgages, contemplate sure you’re reviewing the same information in each loan such as loan amount, mortgage term, monthly re-payment, early settlement charges and annual percentage rate (APR).

Working with a Business mortgage Broker

Because of the complex nature of the commercial loan market company directors may approach a mortgage broker or financial adviser to help them source an appropriate lender. A business loan brokerage is a firm that acts as a broker arranging business mortgages, business development finance and bridging loans. A business loan broker will help you find the right commercial lender for your circumstances, although it is always worth talking to your bank because they know your business better than almost anyone.