Commercial Mortgages – Cheaper & For Any Business Purpose?
Lower cost and more flexible commercial mortgage lending sounds great. Doesn’t it?
Let’s bring back an old friend to help, The Recovery Loan Scheme. Now branded as the trendy new RLS 3.0, it’s almost as if the British Business Bank asked Apple what to call the latest incarnation of the scheme.
In short, forget what it is call because this time the scheme offers something worthwhile at a time when it may be most beneficial.
There are a few things here that are really worth taking note of.
At a time when interest rates are going up, every other outgoing of a business is going up, tax is going up (cue Ms Truss please…) it is a chance for many businesses to actually reduce some finance costs.
Stand back or take a seat, I really like this new commercial mortgage scheme.
Why I Like It
It’s not just about buying commercial property. Whilst the borrowing is secured on commercial property, and it can be used to make a new purchase, it can also be used to refinance existing borrowing, consolidate other borrowing, or release working capital into your business.
There is plenty it could be used for and a combination of those things mean that many businesses will be able to reduce down their monthly outgoings quite significantly. We’re also seeing is a lot of landlords wanting to exit at the moment and give that option to the current tenant to buy the unit. This scheme works because it gives businesses a chance to buy that asset and give them some leway on trading over the last few years.
It gives options at a time when CBILS and BBLS capital repayments may be starting to bite with menace.
What are the details?
Keeping it simple (you can download the summary here):
- Loan sizes from £250,000 up to £2 million
- Capital and interest, interest only or part and part repayments
- Variable rate or fixed rate
- Secured by commercial property which can be 100% commercial, semi-commercial, owner occupied or investment held
The flexibility is there. It is subject to affordability, all lending is, but the affordability rules are more flexible than you may think.
Where moving from rented to owned property the loan cost normally balances out. Where consolidating other borrowing the loan cost is normally a reduction on what is being paid. All nice factors when looking at showing affordability.
It really is that this type of scheme comes along at the right time and this may be one of those rare cases.
My suggestion is that if your business:
- Owns commercial property and wants to reduce the mortgage cost or consolidate CBILS or other borrowing and reduce outgoings
- Owns commercial property and wants to release capital
- Has the option to buy their existing trading premises or buy elsewhere
This may be an ideal opportunity.
Any questions, you want some figures or more details then get in touch.
By Dave Farmer
The Video Version