Commercial Property Finance

Commercial property finance, like the property itself, comes in many types, each addresses a particular type of transaction.

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This can make it both complex and difficult to understand. The most common commercial property transactions fall in to broad classes, these are…


Commercial mortgages are available for owner-occupiers who wish to buy the premises they currently occupy or buy a new premise to move into. Funding is available from a large number of lenders many of whom will usually fund up to 75% of purchase costs, repayable over terms of up to 30 years. The lender will assess the level of advance based upon the income generated by the property or the profitability of the owner-occupier.

Commercial buy-to-let

Commercial mortgages are also available to enable investors to buy commercial property with the intention of letting it out to a tenant. Although similar to a residential buy-to-let, the lender will look at tenant credit quality carefully because of the difficulty in re-letting once vacant.

Residential buy-to-let

This is a large and busy market, commonly used by professional landlords with a property portfolio, as well as the more numerous small private landlords.

Development finance

Short-term loans are available from many lenders for both the development of a new project, or the refurbishment of an existing property. Lenders will generally advance up to 70% of the gross development value, and terms can be up to 24 months.

Portfolio finance

A type of long-term loan commonly used by property investors with several rental properties. This type of loan allows the borrower to consolidate all borrowing into one loan. Serviceability is assessed based upon rental income.

Bridging finance

Bridging finance is a type of short-term lending that finances a development during its construction, upon completion you can either clear the loan in full or secure a more permanent form of finance. The funds are usually provided to the developer within 24 to 48 hours. Bridging loans are of two types open and closed. Closed loans are a line of credit with a fixed exit date in place. Open loans are given without a fixed exit, i.e. “up to” a certain date. Interest can often be rolled up for an initial period.

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