Do 100% Commercial Mortgages Exist?
One of the main questions we get asked by many new and existing clients is, can you I get a 100% commercial mortgage? Today I hope to help clear up what a 100% mortgage is, if they exist, how you can get one and the risks involved.
What is a 100% commercial mortgage?
100% commercial mortgages are where the applicant wants to borrow 100% of their property’s value in order to either purchase it, or release equity within the property. Sounds great, no need to risk your own capital! However as with everything in finance it’s not that simple.
In order to borrow 100% of the value of the property, the lender will almost always require an other asset to act as collateral. This may be your current home, stocks and shares, antiques, or any other valuable asset. It is wrong to assume the lender is taking all of the risk, if your venture fails, any asset used as collateral is at risk.
What type of property can I get a 100% commercial mortgage on?
Almost any type of property is eligible as long as you’re either going to be trading from there, or there is sufficient rental income to cover the mortgage repayments. You can build or remortgage your buy to let portfolio, buy a new hotel or B&B, new office space to lease or occupy, almost all property is eligible.
Are 100% commercial mortgages interest only or repayment?
In general, lenders will want to see the amount of money you owe them decrease. Interest only 100% mortgages are available through some lenders, however perhaps a commercial bridging loan will be a better option and worth investigating.
How do I get a 100% commercial mortgage?
For a lender to offer to lend you 100% of the commercial property’s value, you will need to provide the following:
- A complete list of assets either personally or owned by your business
- Business plan for the property you’re looking to purchase
- Business projections
- Current loans and liabilities complete with current amounts repaid monthly
You will also be asked for bank statements and further information may also be required.