TL;DR: skip to the bottom, otherwise read on!
I recently assisted a client who held a commercial mortgage on a property in Derby. The property’s complexities, previous usage, and my client’s ambitious plans necessitated the original placement of the mortgage with a specialist lender on an interest-only repayment basis.
Finding the right lender for every situation
Specialist lenders cater to various circumstances, and some of you may be familiar with the lender I’m referring to. It starts with a ‘T,’ rhymes with Forever, and came with an interest rate that would leave most people in shock, even during times of historically low rates.
Rising interest rates take their toll on mortgages
Fast forward a few years, and the significant increase in the Bank of England base rate propelled this client’s interest-only mortgage with the specialist lender into orbit. While a trip to the moon may sound thrilling, it wasn’t the journey my client had in mind at the time.
So, what was our approach?
Another specialist commercial property mortgage broker had already informed the client that their only option was to stay with the same lender. Although the business could afford to continue, it was a burden the client no longer wished to bear. While the specialist lender served its purpose in facilitating the property purchase, we needed a more practical solution backed by a solid business approach.
A fresh perspective
Considering my client’s multiple trading businesses that supported the main property-owning company, I took the time to thoroughly review their separate business accounts and, more importantly, the live management accounts. In doing so, I identified something the other broker had overlooked.
Simplifying the complex
It was evident that this wouldn’t be a straightforward process. However, I have well-established relationships within the commercial banking sector. After some back-and-forth with my contact at one of the leading high street banks, we arrived at a point where they were willing to offer my client a mortgage that not only paid off the existing mortgage but also allowed her to access an additional £20k. This funding would support ongoing modernization of the building and the development of the businesses. Moreover, the mortgage was converted to a full repayment plan, aligning with my client’s desire to eventually own the property outright. She had initially been concerned that transitioning to capital repayment would be too expensive.
Even better news
The new repayment mortgage payment turned out to be lower than the previous interest-only payment, and my client also had access to the additional £20k.
That’s what I call achieving a remarkable result and ensuring one happy client!
TL;DR:
After a client found themselves stuck with a high-interest commercial property mortgage, I stepped in to find a better solution. By leveraging my client’s multiple businesses, I negotiated with a leading high street bank to secure a repayment mortgage that paid off the existing debt and provided an additional £20k. Not only did this save my client money, but it also supported ongoing development. The new mortgage payment is lower than before, resulting in one happy client.
