Owner Occupier

These Commercial mortgages are for individuals and companies purchasing a property as business premises to occupy. Lending on these loans are typically set on a margin above bank of England base rate of between 1-2%.

Pricing of loans typically depends on 3 main areas. The loan to value of the loan is typically 75-80% quite often when a loan is geared at a lower loan to value a lower rate will apply as the lender is taking less risk. The quality of the tenant and their financial feasibility. This is determined from either a Pinders/Taylors valuation to value the business or simply by looking at company accounts.

Finally Location is important as the time span to sell and buy commercial property for example offices and industrial estates is longer lenders prefer commercial property that is in a highly desirable location.

Another factor a lender must consider is if the property/business is being sold as a “going concern” this means that the property for instance a hotel has not just got a bricks and mortar valuation but also that the clientele of that property in its current usage is enhancing the properties value.

On owner occupier mortgages it is important to remember that often a commercial tenant and a residential tenant may be involved. An example of this would be a public house. If more than 40% of the property is residential the loan would then become subject to FSA regulation.

In owner occupier there are very many specialist areas for example pharmacists or licensed premises. In these cases it is even more advisable to use a professional finance broker who understands the market. It must also say in the articles of association of a company that the company has the power to borrow.