I often get asked questions on similar topics, so I thought it would be a good idea to share a few of the top questions and answers.  

Part one has questions on mortgages, property, banks and bridging finance. Part 2 will be be with you next month

If you have a particular question to ask Howard or have common questions you are asked, get in touch and let us know.  Call Howard now on 01332 244566.

Q1. Should we buy the commercial unit/shop/office for our own business in our own name or through the company?

A.  This is a question you should always put to your own accountant who takes responsibility for the long-term decision. There are taxation implications both while you have a mortgage and when you sell the property.

From a lender’s point of view it rarely makes any difference how you buy it: although if you buy in personal names and rent to your business you will normally have to formalise the arrangement with a lease.  That’s no big deal.

Q2. Do you think a fixed rate mortgage is a good idea?

A. It all depends on the relative rates involved, the length of the fixed rate period and your attitude to risk.  At the moment a short term fix of say two years, would appear pointless if you intend keeping the property for longer, if the rate were 1.0% or more above today’s variable rate.  A three, four or five year fix would appear to be a lot more worthwhile, especially if you just want to be assured of your monthly payment over that period.

Q3. Don’t all the banks have the same attitude to lending as each other?

I’m very glad to say that they don’t!  All banks have an idea on how much they want to lend to particular sectors of the economy.

Take loans on property for example.  Two of the high street banks still have too much money in property lending so they won’t look at new applications at all.  One high street lender is pretty keen on most types of property loan and two secondary banks have been set up to lend on nothing else but property!

There are also huge differences in attitude towards start up businesses, property development finance, the leisure industry (pubs and restaurants) and several other categories.

Q4. Can I get a commercial mortgage when I’ve got adverse credit?

It all depends what your problem was, how long ago and what you want to do now.

If you’re a builder wanting to put a couple of new houses on a plot you own already, there will almost certainly be a willing lender provided you aren’t currently bankrupt.  On the other hand if you are applying for a long term loan to a high street bank and you missed a credit card payment three months ago, don’t be surprised if they say “no”!  If you have adverse credit ask a quality broker, don’t turn to the internet!

Q5. Isn’t bridging finance expensive?

Expensive compared to what?  For example you can buy a property now for £100,000 borrowing £60,000, spend £15,000 on it and turn the value into £150,000 in six months, what does it matter if the finance costs you £10,000?  If you couldn’t buy the property without bridging finance you’ve just lost £25,000.

Part 2 coming soon….