Getting a commercial mortgage can be tricky, especially with so many options and fine print. Many businesses end up overpaying or stuck in bad deals. This blog shares how using a Commercial Mortgage Broker saved one business £40,000 and avoided costly mistakes.
Keep reading to find out how they did it!
What problems did we encounter when trying to get a commercial mortgage?
Lenders asked for a 25% deposit, which strained our cash flow. The lower loan-to-value ratio of commercial mortgages limited how much we could borrow.
They also demanded years of detailed financial records, including business accounts and bank statements. High interest rates added to the stress, making payments harder to manage long-term.
Complex ownership structures confused the process even more. Factors like credit score and lease terms complicated approval further, delaying progress significantly.
How a Commercial Mortgage Broker Helped Us?
A commercial mortgage broker opened doors we didn’t even know existed. They found options that matched our needs and saved us from costly mistakes.
How do brokers provide access to the whole commercial mortgage market?
Brokers work with a wide range of commercial mortgage lenders. They have connections to banks, specialist lenders, and alternative finance providers. Through these relationships, they can find deals that match different business needs.
For example, some brokers access lending options from Shawbrook or MFB ranging from £50,000 to £35 million. They also understand lender criteria for various property types like retail spaces or offices.
Specialist cases are manageable for experienced brokers. They assist clients in securing loans on mixed-use properties or large portfolios that standard lenders might avoid. Their expertise often provides access to high-value borrowing opportunities.
Brokers utilise dedicated platforms for case submissions too, saving time during applications while offering solutions customised to specific client requirements.
How can brokers negotiate better deals for businesses?
Experienced in mortgage lending, brokers use their relationships with lenders to secure lower rates. Shawbrook’s interest rates can drop to 6.39%, showing how brokers find cost-effective options for businesses.
They also negotiate terms like fixed-rate mortgages for up to 10 years or variable rates, suiting different goals.
For loans requiring a 25% personal guarantee, brokers often help reduce risks by explaining conditions clearly and finding alternatives if needed. Existing clients benefit too; brokers request arrangement fee discounts from lenders like Shawbrook.
Flexible repayment plans, including interest-only options, are another area where they add value during negotiations.
How did we save £40,000 on our commercial mortgage?
The initial deal from the lender had steep costs. The broker stepped in and sourced a better offer by accessing the full commercial mortgage market. Their efforts resulted in securing lower interest rates and reduced arrangement fees, directly saving £40,000.
Shawbrook’s flexible loan structure played a role too. For loans over £5 million, their dedicated case management provided cost-effective options. The broker’s skills in negotiating terms ensured the business avoided an unfavourable agreement that would have drained finances further.
What mistakes did we avoid by using a broker?
Avoiding mistakes saved the business both time and money. A commercial mortgage broker helped dodge costly pitfalls throughout the process.
- Entering a high-interest deal was avoided thanks to their expertise. Some lenders offered rates far above market standards, which could have drained profits for years.
- Overpaying on deposits did not happen due to accurate advice on minimum deposit requirements. This reduced upfront costs significantly.
- Applying to unsuitable lenders was a mistake they prevented early on. They only introduced options that matched the business’s credit history and financial standing.
- Missing key lender criteria, like incomplete financial documents or statements, was not an issue with proper guidance.
- Agreeing to unfavourable repayment terms never came close since brokers negotiated better deals directly with underwriters.
- Accepting unnecessary fees was avoided because some banks, like Shawbrook, paid the broker instead of charging extra service costs.
- Losing time on improper applications did not occur due to their clear understanding of the loan-to-value ratio (LTV) required by different lenders.
- Risking rejection from offshore ownership structures disappeared as brokers knew how to navigate complex cases involving trusts or expats.
- Facing penalties for unclear guarantees never became a problem since brokers explained personal guarantee risks in simple terms.
- Settling for poor communication from lenders was avoided entirely with their proactive updates and support during underwriting stages.
What are the key benefits of using a commercial mortgage broker?
A commercial mortgage broker can save time, money, and stress. They bring expert knowledge and access to a wide range of lenders.
- Brokers connect clients with lenders not typically found on the high street. Their network includes providers offering loans for values from £50,000 to £35 million.
- Borrowers receive access to flexible loan options like fixed rate mortgages, interest-only loans, or variable rates. This allows customised solutions based on specific business needs.
- Brokers negotiate better terms than businesses often achieve alone. Their expertise helps secure lower mortgage rates and reduce financial pressure.
- Applications are handled professionally to meet lender requirements. This reduces the risk of costly delays or rejected applications.
- Support extends beyond loans for single properties. Brokers assist with portfolio lending for landlords or mixed-use investment properties.
- Personalised help is another key benefit. Dedicated contacts, such as Andy Elley or Robin Tait from trusted firms, guide clients through every step.
This leads smoothly into discussing how using brokers saved £40,000 in our case!
Conclusion
Using a mortgage broker turned out to be the smartest move. They saved the business £40,000 and avoided a deal that could have sunk it. With their insights, better rates were secured and costly mistakes dodged.
The right advice made all the difference, proving how crucial expert help can be in such decisions. Sometimes, it pays to let professionals handle the tough stuff!