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Commercial property finance

Commercial property finance has many variants, sometimes making it complex and difficult to understand. There are several platforms out there, each suiting different projects – and the usual problem is finding out which product best suits your business needs. Here’s our guide to the more common commercial property finance products available on the market.

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Commercial mortgages

Commercial mortgages are available to a range of businesses, from sole traders to limited companies. Lenders will normally fund up to 75% of purchase costs with terms of up to 30 years. Typically they’ll secure the mortgage against a first charge and affordability is based on the profitability of your business, and its ability to make the monthly payments.

Property development finance

Property development finance is usually in the form of a short-term loan that’s used for the development of a new building project, or refurbishment of an existing property. Lenders will look to advance up to 70% of the gross development value, and terms can be up to 24 months.

Portfolio finance

A long-term business loan that’s offered to property investors who have a number of rental properties. The lender offers the ability to consolidate borrowing into one loan. Serviceability of this loan is based on rental income.

Bridging finance

Bridging finance is a short-term finance solution often favoured by property developers and investors, which provides a quick way to finance the purchase of a property. The lender will take a first charge on your property, and will seek an exit once the loan has come to term.

Auction finance

Auction finance is designed for experienced property developers and landlords. It’s a way of arranging funding in advance of an auction, so you know the property value and type you can finance before you walk into the auction room.

Mezzanine finance

A little more complex, this is a hybrid type of finance that combines elements of debt financing and equity investment – and is secured against the property. Mezzanine finance often helps property developers reduce their cashflow requirement, enabling them to finance projects which would normally require a larger capital share.

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