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A commercial mortgage is very similar to a personal mortgage. The only real difference is that a company will make the purchase rather than an individual. Unlike residential mortgages - commercial and semi commercial lending falls into a very strict lending criteria. Commercial lenders are not your normal high street building societies. Most banks and building societies will offer commercial mortgages, but they have very strict lenders criteria. It is often better to approach a commercial broker or specialised commercial lender. You will find that the criteria will be a lot more relaxed. The maximum amount that the lender will typically give is normally 85% of the purchase price. However 100% deals are available with extra security. You can have the mortgage for any period between 1 to 30 years and the type of mortgage can be a repayment or interest only. Just like residential mortgages, there are always special deals available. You can also choose between a variable or fixed rate. The process to obtain the loan is also very similar to residential mortgages. You will first receive a written decision in principle for the loan. This is a note from the lender detailing the rates he would be prepared to offer you based on the information he has received. Once you are happy with the 'Decision in Principle' then you will need to complete a formal application. This will go into a lot of detail about the business and the property. Before the lender makes a formal offer the property/business needs to be valued. If any issues arise from the valuation or formal application then the lender may withdraw from the deal or change the terms offered on the 'Decision in Principle'. You are now ready to pass the deal over to your solicitor. They will complete the paperwork and transfer the funds.
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