Commercial Loan / Mortgage, time to fix?

[Noblebenn]

Just wondering what peoples thoughts were on whether to fix for a 5 or 10 year term a commercial loan that is currently 2.5% over base. The loan is against a mix of commercial and residential properties held in a Ltd company.

Similar situation in principle to the residential side of things but commercially rates are just higher with a little less flexibility or competition in the market.

Any thoughts appreciated.

[Austin_Metro]

I was told to lock in a good rate for a long time. Not a bad one. Which is which is perhaps the next question.

[Noblebenn]

Yeah with everything I’m reading my feeling is 5% fixed for 10 years could be a good move. I’m not one to kick myself should the base rate drop lower in 5/6 years time.

[loafer123]

If you are worried about rates increasing well above 5%, which is implied by your question, perhaps you should consider an interest rate cap instead?

[Noblebenn]

If I'm honest I never knew a cap could be introduced. Is this at the discretion of the bank?

[loafer123]

Noblebenn said:

If I'm honest I never knew a cap could be introduced. Is this at the discretion of the bank?

Depends on the size of the loan and your sophistication...banks are less willing to sell interest rate hedging to those who don't understand them, given they were sued alot after the GFC...but it is possible to buy an interest rate cap.

[dhutch]

I am also wondering the same all be it domestically.
We currently have 9 months left having fixed for our first 5 years, 35 year product. Currently 2.47% fixed rate, till to end July 2023.

Online supermarkets appear to be showing I can fix for 5 years at around 3.5-3.7% currently.
Variable rates are coming in at around 2.2-2.3% for a 2 year product. 2.64% with our current provider.
Not sure why, but this appears a lot better than the news outlets are suggestion, or the OP is expecting for commercial loans?
Our LTV ratio is currently around 50%.

Just looking ahead and thinking aloud.
Will it have calmed a little come July, or got worse? The million dollar question!

[Noblebenn]

My loan is commercial based.

I have spoken to the bank, TSB, and a cap is not something they do.

Loan is mid 6 figures.

[loafer123]

Noblebenn said:

My loan is commercial based.

I have spoken to the bank, TSB, and a cap is not something they do.

Loan is mid 6 figures.

Yes - you would probably need to be a "corporate" customer with bigger loans, to be able to do a stand-alone cap.

[Noblebenn]

Any problems with taking out a personal loan at a lower rate and lending this to the company to reduce the commercial loan. The paying the loan back via myself treating it as a personal loan with interest?

I'm happy with the rates I've been given, early 5's, just need to decide on length of fix now, 5, 7 or 10 years.

[Austin_Metro]

Noblebenn said:

Any problems with taking out a personal loan at a lower rate and lending this to the company to reduce the commercial loan. The paying the loan back via myself treating it as a personal loan with interest?

I'm happy with the rates I've been given, early 5's, just need to decide on length of fix now, 5, 7 or 10 years.

You’d need to check the tax implications- that’s beyond me - but also you’d then have a personal liability for the loan if the company couldn’t pay you.

I realise your company may be wholly owned etc and just an extension of you financially, but might be best to keep separate.