Think of this as 'Commercial Buy to Let'. Commercial investment
mortgages are available on any property type and in all cases, formal lease agreements
must be in place. Commercial investment mortgages are available for residential, semi commercial (e.g.
flat and shop) and commercial properties.
Property configurations differ, but any residential aspect of an investment property
(other than for their client's own use) should be subject to an Assured Shorthold
Tenancy agreement, usually for a minimum term of 6 months. Sight of the agreement
is required by all lenders.
Any commercial aspect of an investment property should be subject to a formal commercial
lease arrangement. Again sight of the agreement is required by all lenders. The
minimum unexpired term of the commercial lease required by most lenders is at least
5 years, and the ideal is a situation wherein a lease term matches or exceeds the
period of finance sought.
Typical LTVs for investment mortgages range from 70% to 75% and interest rates start
from around BBR + 3.00%.
Irrespective of the potential maximum loan to value against a property type, any
mortgage against a commercial investment property will be restricted according to
the rental income obtained and ability to service part or all of the debt in the event of rental voids.
Status lenders will typically expect the rent received to cover annualised mortgage
repayments by 125% - 140%. If additional flexibility such as an interest
only payment period is required by the client, certain lenders may increase
this covenant to 150%. In addition to assessing the client's financial means, Status
lenders will also assess the financial calibre of commercial trading tenants.
Self Certification terms on investment mortgages equate to a maximum 60% - 65% loan
to either 180 day or 90 day sale value. Rates start at 12.9%.