Business Mortgages
Discussion
Early days really to start thinking aout this, however I've noticed a very nice office for sale in Bristol not far from where im based and on the basis that renting / leasing is like burning money, would anyone recomend the purchase option.
Are the rules generally the same for businesses buying - i.e deposits etc. Do mortgage companies make life hell or are they falling over themselves to dish out the dosh.
This particular building is 500k and has 3 times the space I would need, but could prove to be a wise investment for the future. What sort of deposits and payment would we be talking about?
As always, any advice gratefully received.
Thanks
Are the rules generally the same for businesses buying - i.e deposits etc. Do mortgage companies make life hell or are they falling over themselves to dish out the dosh.
This particular building is 500k and has 3 times the space I would need, but could prove to be a wise investment for the future. What sort of deposits and payment would we be talking about?
As always, any advice gratefully received.
Thanks
Never to early to start sorting this out, as it will take you forever. If you think buying a normal house is hard…
Done something similar a few years back. Bought our factory for just under 600k. Moved from a shed in my back garden to a 10,000 sq ft major operation!
Balls on the chopping block big time but it saved me over 20k a year in rent and in 10 years I will own it!
25% deposit min for commercial mortgages. I used the equity in my house for the deposit.
Bank of Scotland was the only ones who would help. Best bank I’ve ever used.
Go for it!
Done something similar a few years back. Bought our factory for just under 600k. Moved from a shed in my back garden to a 10,000 sq ft major operation!
Balls on the chopping block big time but it saved me over 20k a year in rent and in 10 years I will own it!
25% deposit min for commercial mortgages. I used the equity in my house for the deposit.
Bank of Scotland was the only ones who would help. Best bank I’ve ever used.
Go for it!
I did the same thing but through my pension fund. It's very frustrating as the competetion that forces companies to compete in the private sector doesn't happen in the commercial world (at least at my funding level) and so you get a 'take it or leave it' attitude. I hope it'll be worth it in the end but if I hadn't spent so much on fees I'd have walked away half way through.
You have a lot more flexibility holding the mortgage in your company's name but don't get the tax advantages of a pension scheme.
Good luck.
You have a lot more flexibility holding the mortgage in your company's name but don't get the tax advantages of a pension scheme.
Good luck.
Just been through the process with a showroom.......my bankers HSBC(my own branch) wanted 1.5% over base.........spoke to chap at another HSBC branch he quoted .75% over base!!! Wanted 20% deposit minimum for exsisting building.........if I bought land and built showroom would only lend 66%!
Showroom fell through anyway but are all banks so inflexible?
From my experience:
10 - 20 years depending on circumstances. Way it up against what you would be paying against rent. You may be able to pay it off quicker than you think. Bank could also stipulate the repayment time so you have no choice.
Bank fee – negotiate big time, their fee can also be incorporated into the loan to avoid that ‘big lump’ payment.
Stamp Duty – speak to your local MP (seriously) some areas of the UK are now stamp duty free due to coming under the governments deprived area schemes or whatever they call it. Anyway worth an argument with them anyway the blood suckers! I missed out on this by 2 months and could have saved £20k! Also check the thresholds, percentages change over different amounts.
Legals – get a fixed fee. You could pay £10k for legals (more bloodsuckers) but if they can get it all done quick you will be paying a mortgage and not rent, so try to think of as cost saving if fast (does this make sense?)
Best banks no question, I’ve had lots… all others are shit (in my opinion)
www.bankofscotland.co.uk/business
www.firstdirect.com (for personal)
It also helps if you have a good business plan, good accounts, and are good at bullshitting…
10 - 20 years depending on circumstances. Way it up against what you would be paying against rent. You may be able to pay it off quicker than you think. Bank could also stipulate the repayment time so you have no choice.
Bank fee – negotiate big time, their fee can also be incorporated into the loan to avoid that ‘big lump’ payment.
Stamp Duty – speak to your local MP (seriously) some areas of the UK are now stamp duty free due to coming under the governments deprived area schemes or whatever they call it. Anyway worth an argument with them anyway the blood suckers! I missed out on this by 2 months and could have saved £20k! Also check the thresholds, percentages change over different amounts.
Legals – get a fixed fee. You could pay £10k for legals (more bloodsuckers) but if they can get it all done quick you will be paying a mortgage and not rent, so try to think of as cost saving if fast (does this make sense?)
Best banks no question, I’ve had lots… all others are shit (in my opinion)
www.bankofscotland.co.uk/business
www.firstdirect.com (for personal)
It also helps if you have a good business plan, good accounts, and are good at bullshitting…
poorcardealer said:
Just been through the process with a showroom.......my bankers HSBC(my own branch) wanted 1.5% over base.........spoke to chap at another HSBC branch he quoted .75% over base!!! Wanted 20% deposit minimum for exsisting building.........if I bought land and built showroom would only lend 66%!
Showroom fell through anyway but are all banks so inflexible?
Barclays can lend upto 80%, RBS similar but depending on your circumstances, probably closer to 75% (maybe even 70%)
If you are developing (which is pretty much what you described) you can negotiate a deal. I've got a deal with my bank (RBS) for development finance, 70-80% finance on the land and 100% development costs, with rolled up interest, and 1% over base, with 0.5% set up costs, depending on the case at hand.
Usually terms are 15-20years on loans for purchasing buildings.
Make a consideration for VAT aswell, as they are commercial properties, they are likely to be standard rate. Speak to your bank, they may bridge loan this entirely if you are VAT registered, just change your VAT accounting to monthly for a period leading to exchange and until it is completed so they get their money back quickly.
Its well worth doing, but bare in mind that only the interest proportion of the payments are tax deductible, although the building may possibly be written down over 20 years.
Finally, and although this may not be easily possible when purchasing on finance, consider buying the property to lease to your own company... you can adjust rentals according to your needs. I'll leave it at that...
ninja_eli said:
Speak to your bank, they may bridge loan this entirely if you are VAT registered, just change your VAT accounting to monthly for a period leading to exchange and until it is completed so they get their money back quickly.
Just remember that if you volenteer to be registered for VAT and your turnover is not above the threshhold. You cannot do monthly returns! They have to be three monthly or Annual.
Which is a bugger!!
Gassing Station | Business | Top of Page | What's New | My Stuff