Commercial Investment Mortgages

Industrial Buildings

Warehouses, factories, industrial parks and single units

Office Buildings

Single offices, office blocks and serviced offices

Retail Premises

Shops, semi commercial units (flats above), shopping centres, parades and retail parks

Leisure Premises

Pubs, restaurants, cafes, hotels, B&Bs, holiday complexes, and guest houses

Health Premises

Dental practices, care homes, surgeries, vets, and opticians

Education Premises

Schools, colleges and nurseries and Student Accommodation

Lease Length

Generally, lenders prefer a lease with terms of 3-10 years remaining as a minimum. The lease determines how long the tenants must stay in situ which secures the rental income for the term of the lease. It also confirms any anticipated increases in rent over the lease term. Additionally, if the lease has a break clause it should not be solely in favour of the tenant alone. 

Rental Yield

Although lenders will have maximum loan to value limits that they are willing to lend against, it is often the rental income that is the most important consideration determining  how much you will be able to borrow and whether a loan is affordable. The lender generally expect the rental income to be at least 125%-145% of the monthly repayments on your mortgage each month for the loan to be granted. This is called the interest coverage ratio (ICR) 

Tenant Quality

The more financially robust and reputable the tenant is, the better it is for the financing terms of the loan. A tenant who is at risk of financial distress will not be considered a reliable source of rental income. Likewise, it will be viewed by the lender to be riskier to have just a sole tenant because failure to pay has a more significant impact than it would with multiple tenants.