Commercial Property Finance Solicitors
Gaining access to and securing property finance is often crucial in commercial property transactions, and there are a number of finance options out there to choose from.
Whether for acquisition finance, development finance and/or exit finance, your lender will require security over the site. They will also check that everything’s in order, such as title, planning, regulatory compliance, before agreeing to advance the money.
That’s not a straightforward process. However, our experienced commercial property solicitors can help you to anticipate what your lender may require.
What is commercial property finance?
Commercial property finance is typically used to purchase new business premises when the business owner cannot afford to purchase the property outright.
It can help business owners to fund the purchase of a new business space such as a warehouse, office or store.
These properties can be let, sold or used as a base for the owner’s own business.
The main ways to finance a new commercial property are through mortgages and commercial loans.
A commercial mortgage is a type of loan that (similar to a residential mortgage) requires a deposit and monthly repayments with variable or fixed interest rates.
Deposits can vary, but commercial mortgage deposits tend to be around 30% of the property’s value.
Repayment plans for commercial mortgages typically last for between 1 and 30 years. With the average being around 15 years.
Interest rates for commercial mortgages tend to be higher than residential ones due to the higher risk involved for the lender.
Commercial property finance used for the construction or refurbishing of premises is typically released on a stage-by-stage basis, where the borrower initially receives a percentage of the property’s value and then is provided with the rest of the funds on a timely basis (such as monthly) or when the building reaches certain stages of development.
Finance for a commercial property can also be acquired through other loans such as:
- A bridging loan: a short-term loan which can be used to purchase a property until long-term finance, such as a mortgage, can be acquired.
- A secured loan: can be used to purchase a property outright or used as a deposit for a commercial mortgage.
Why choose Barcan+Kirby for help with property finance?
Our solicitors are experts in commercial property finance law, meaning we can deal with your property finance transaction as efficiently as possible. We will work with you to understand your expectations and needs and help you to achieve a result that is financially secure and which protects your interests.
Our team can advise you on:
- Buy To Let refinance
- Bridging/short-term finance
- Loans syndication
- Drafting loan agreements and legal charges
- Development finance
Our expert team are on the panel of numerous commercial lenders and so we are likely to be able to act for your proposed lender. This includes acting on behalf of you and the lender in the transaction if the lender is agreeable.
If our commercial property team have already been helping you with the development, it puts us in an excellent position to handle the refinance, as we have the bulk of the information and documents on file already.
Personal guarantees
Lenders often require individuals to give personal guarantees to back up the security over the land. The lenders require that an independent lawyer certifies that the director has been advised on the guarantee. Our property finance solicitors can advise directors and give these certificates.
Commercial property finance FAQs
Any building or piece of land used for business or development is considered a commercial property. These are the main types:
Retail
A retail commercial property is specifically designed and used for retail businesses. These properties include shopping centres, supermarkets, retail warehouses, high street shops, car showrooms, pubs and restaurants. They serve as spaces for the sale of goods and services to consumers and are usually located in high-traffic areas.
Office
An office commercial property is designed for business operations, housing professional services and administrative activities. These properties include office buildings, business parks, and coworking spaces, as well as facilities such as car parking, amenities and other essential services.
Industrial
An industrial commercial property is designed for manufacturing, production, storage, or distribution activities. These properties include industrial units, warehouses, factories, distribution centres and agricultural property.
Development
A plot of land or a building purchased for refurbishment or the construction of new commercial or residential units for sale or rent once the building works are complete.
A residential mortgage is a loan to secure a property that you intend to live in (your residence).
A commercial mortgage is for business owners who want to buy property or land for commercial use or development.
The main difference between the two mortgages is that the value of commercial land or property tends to be much higher.
You’ll pay a higher interest rate on a commercial mortgage because they’re considered a higher risk to lenders.
Residential mortgages present less risk to lenders and there is more competition in the market, which makes it a cheaper process.
Also, because the commercial mortgage is generally larger and the process more complex, you’ll have to provide more information than you would for a residential mortgage.
However, acquiring a commercial mortgage is generally not based on your personal finances but on the financial health of your business and the prospects for the site in the future.
Typical loan terms for commercial property finance vary but commonly range from five to 25 years.
Interest rates depend on factors like the borrower’s creditworthiness, property type, and market conditions.
Loan-to-value ratios typically hover around 70-75%. Repayment structures may include fixed or variable rates, and balloon payments are not uncommon.
The lending process involves rigorous due diligence, scrutinising the property’s income-generating potential, and often requires a higher level of documentation than residential loans.
To determine the right financing option for your commercial property you should assess your business’s financial health, property type, and long-term goals.
Consider factors like interest rates, loan terms, and repayment structures. Compare offerings from banks, commercial lenders, and government schemes.
Engage with a solicitor to navigate legal complexities. Conduct thorough due diligence on potential lenders, weighing their reputation and customer reviews.
Seek professional advice to tailor financing to your specific needs, ensuring it aligns with your business strategy and cash flow projections.
The duration for processing a commercial mortgage and releasing funds varies depending on the mortgage type and your individual circumstances.
A simple owner-occupied mortgage may be processed within several weeks, but the release of funds could take several months.
Contact our commercial property finance solicitors in Bristol
If you have questions about financing or refinancing a site, our property finance solicitors are here to help. We advise clients throughout the UK, from our offices across Bristol and the surrounding area in Bedminster, Bishopston, Bristol city centre, Kingswood and Thornbury.
To arrange a consultation with our specialist commercial property finance solicitors, call us on 0117 325 2929 or complete our online enquiry form.