Let’s first take a look at how these rates work:
Let’s talk rates
The rates for a commercial mortgage are, understandably, a little different to those associated with a residential mortgage and this is largely because there is a greater risk involved for the lender.
As with a residential mortgage, you may be able to opt for either a fixed rate mortgage or a variable – however, most business mortgages are offered at a variable rate. The rate quoted to you will either be as a % over base or as a LIBOR rate; the latter being a rate at which banks use to lend to one another.
That said, you are unlikely to be quoted a rate until the lender has been able to risk assess your business. Many lenders also have a pre-determined risk profile that they work with and if your business falls outside of this risk profile, you are likely to be refused by that particular lender.
Therefore, there isn’t really a ‘typical’ rate for this kind of lending as what you are quoted will very much depend upon the lender, your circumstances and the level of risk associated with lending to your business.
If you fall under the ‘low risk’ category then you will obviously be offered better rates than a business that is considered a higher risk.
So how can I get the best deal?
The best way to maximise your chances of being accepted for a commercial mortgage, and for securing the best possible rates, is to enlist the help of an experienced broker. Doing it off your own back, and approaching lenders yourself, can be time consuming and confusing – and you may not necessarily end up with the best deal despite all your leg work!
A broker, on the other hand, will have extensive knowledge of the marketplace as well as access to a network of lenders; they will understand which of these lenders will be more likely to offer a mortgage for your business, and they will also know how to package your application to make it more appealing.
Want to know more?
If you have any other questions about how to secure a commercial mortgage, or you want to find out what rates might be available to your business, contact our expert team today. We can discuss your situation and help you find the best possible deal.