AND LENDERS ARE MEETING THIS DEMAND WITH MORE FLEXIBLE PRODUCTS BUT WORKING WITH AN EXPERIENCED PARTNER IS KEY WHEN IT COMES TO FINDING THE RIGHT SOLUTION.
We’re working with a growing number of brokers who are helping clients to invest in commercial property for the first time. With the right property, investors can earn a good yield on a full repairing lease, with tenants generally tied in for longer periods than a standard AST, so they can have real stability.
Lenders are becoming more flexible on the types of lease they will allow on commercial properties. Traditionally, high street lenders would look for a five-year lease on a commercial property, with no break clause, but the challenger banks reduced this requirement to two years and some lenders will now allow a rolling a lease, which can make the property more attractive to potential tenants.
First-time investors in commercial property will have a more limited choice of lenders, but it is still possible to source a good deal for a first-time investor and lenders will base their decisions on the strength of the tenant and the debt service cover.
We have found that a lot of brokers, who aren’t as experienced in this market, do not understand what is required on leases and which lenders will consider different types of lease, so we can help by providing the expertise to identify the most suitable product for a client’s circumstances.
We can also work closely with our Short Term Lending team to provide bridging finance to prepare a property to be let and then provide the exit with a longer-term commercial loan, enabling your clients to build their investment in the commercial market.
FIND OUT more about how we helped an inexperienced commercial landlord secure a mortgage