After submission of a case, the bank will normally offer indicative terms, which state a % margin either over the Bank of England base rate or possibly the new index – SONIA (Sterling Overnight Index Average). Higher margins are demanded to reflect a higher perceived level of risk. Our aim is to present the case such that the risk perception is as low as possible.
The High Street banks’ indicative offer terms will also state its arrangement fees (typically 1-2%) and the loan structure. The repayment schedule (often referred to as the amortisation rate) is specific to each set of circumstances. For commercial properties, the repayment profile is usually no longer than the remaining years of the commercial lease and for residential properties, the term can be as long as 25 years. We assist our clients in negotiating the most appropriate repayment schedule, possibly incorporating an interest-only initial period or part-amortisation. The actual term of a commercial loan from High street lenders is often no longer than 5 years, after which the loan needs to be repaid, or renewal terms negotiated.
The Challenger banks, charge the same fees as the High Street, but their interest rates are higher. On the plus side, they offer interest-only mortgages, possibly for mortgage terms of as long as 30 years. This allows them to lend at higher LTVs since the affordability is better with an interest-only mortgage.
We are able to obtain funding up to 75% of the value of the property, or 100% plus, if additional security is offered on a first, second, or third charge basis
Also included under the umbrella of Commercial Finance is:
- Development Finance
- Refurbishment Finance
- Bridging Finance
- Short-term loam Finance
Bond Finance has an in-depth knowledge of all of the above.