Commercial and Investment Finance 

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The finance is underwritten based upon the financial strength of the tenant, the rental yield, the length of the lease and the location and quality of the property. The loan to value available can vary considerably, as can the interest rates charged and the term of the loan.

Tenants are normally graded based upon their financial strength; with government covenants awarded the top grading and small local businesses the lowest level of grade.

• Grade A: Government departments and local authorities.
• Grade B: Large FTSE listed or international companies, e.g. BP, Vodaphone, Glaxo SmithKline, Prudential and Tesco.
• Grade C: Large companies, e.g. Mothercare, JJB Sports, Next and Thomas Cook.
• Grade D: Medium-size companies, e.g. Lonrho, Mulberry and other AIM-listed or large privately owned companies.
• Grade E: Small local businesses ranging from solicitors and other professionals through to hairdressers, local shops and other small businesses.

Commercial properties suitable to secure a mortgage against include offices, shops, industrial units, garages, hotels, nursing homes, leisure clubs and surgeries.

A commercial lease is normally set up from one through to twenty five years, although it is possible to find leases for terms up to seventy years. Lenders prefer leases to be as long as possible and for Grade A-D the term will normally be a minimum of five years.

If a lease is set up for twenty years with a break clause at five years most lenders will look at the lease as a five year lease.

Grade F small businesses can have leases for a shorter period of time, e.g. for two to three years. As the tenant is not considered to have financial strength, the lender will normally offer a lower loan to value.

At the opposite end of the scale is a property that has a twenty year lease with no break options let to a government department with upwards rent reviews throughout the term of the lease. When a property is valued with this type of lease the value is based upon a guaranteed income stream as much as the property.

If you own or are looking to buy a commercial property, Smartlandlord.co.uk^® can provide a free analysis of the commercial investment property and provide advice on the finance options available to you.

Commercial finance is also available for businesses that want to buy or refinance commercial property for their own use.

The following loan terms are provided for guidance on the type of finance available through Smartlandlord.co.uk^®.

• Loan Size: £250 000 to £50 million
• Loan to Value: Up to 80 per cent / Up to 100 per cent is available with additional security.
• Interest Margin: From 1.5 per cent
• Loan Term: Up to 25 years
• Type of Loan: Interest Only, Part Interest and Part Repayment and Capital and Interest.
• Borrowers: Individuals, Partnerships, Limited Liability Partnerships, Limited Companies, Offshore Companies and Self Invested Pension Schemes.

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