The case in brief
- Client: Us National / UK resident
- Property type: Commercial purchase
- Property value: £5 million
- Loan Amount: £4 million
Purchasing a commercial property, where the business intends to only part occupy the property and to rent the remaining, can be highly difficult to achieve. This is compounded if the business has a limited accounting history. With the addition of an initially high loan to value mortgage ratio, many lenders would be nervous without a greater form of security. This was the case with our relocated foreign mortgage client, who required office space in the UK.
Our client
Our client was an American national, arriving in the UK within the past 6 months in order to join a business as a majority shareholder and director. The business had been formed 18 months prior but was at a stage of expansion where further office space was required. The client did not want to rent an office and so was looking for an investment, which would involve 20% occupied by the business and the rest of the property rented externally.
With a property value of £5 million, the client only wished to use a relatively small deposit amount of £1 million initially.
Our solution
This was a highly complex situation, due to the nature of the part owner occupier, part rental makeup of the mortgage deal. The fact that the client had only recently moved from America into a new business would also require careful negotiation. Our relationship with a specialist lender allowed us to use the rental income from the remaining commercial units as a bargaining tool with the lender, ensuring that they felt comfortable that sufficient security was in place to repay the mortgage in full.
We were able to secure a mortgage deal with an initial high loan-to-value ratio of 80%, which we structured with a guarantee of amortizing down to 65% within the five-year product. We were also able to secure a highly preferential mortgage rate for the client.
Securing funding for a commercial property can be difficult even with highly established businesses. The fact that our client’s business was relatively new, with very little history, meant that security needed to be achieved in a different manner. Through our highly experienced mortgage brokers, we were able to utilise the rental income as a satisfactory income stream through which to fund the purchase and to continue to repay the mortgage. GET IN TOUCH TODAY.
