Commercial mortgage rates

K

kevv12

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I currently have an interest only mortgage with one of the big lenders for a commercial property purchased in 2000, let to a blue chip high street operator on a 35 year lease,rental income €42k,outstanding loan €420k ,The current rate of interest is 2% over prime i.e 6.25% interest only ,I am considering looking around for a better deal as the bank I currently use state that because this is a commercial mortgage that I have to pay this premium,surely in the current climate this should be viewed upon as rock solid risk free loan on the banks behalf and the rate should be a lot better.I also have 2 other investment residential loans @4.6% variable with the same lender.Can anybody suggest a lender/broker that would specialise in commercial mortgages on an interest only basis and what would be the current competetive rate for "commercial mortgages"?
 
To be honest I'd check the big ones:
anglo, aib, boi etc
what you're paying is ECB plus 2.75% which is lovely for them if they can get it . . .

I have a 330K interest only residential investment mortgage with ptsb for ecb plus .9%. I asked them to improve on their ecb plus 1.25 and they did. I said I'd move otherwise

if I were u, I'd threaten to move - you must have some serious equity built up since 2000 plus I assume a strong tenant and good lease.
Don't take no for an answer.
 
All these are assessed on a case by case basis.

Rates a based on the Euribor which is currently 3.8% -
you could add at least 1.5% on top of that for standard rate.
add more for more risk to the bank, etc.

4.6% on the investment properties is fairly average.
Best rate would be 4.25% depending on size of loan and loan to value
 
you do not have a large enough o/s balance to be able to do a better deal. If you had loan of €2m+, then you migth get away with 1% over euribor or max 1.25%.
 
say I could get a rate of 1.5% over euribor to bring the rate to 5.3%, this would make a saving of €4000 pa ,would this be a realistic figure to try and acheive on this size of loan?
 
kevv12 said:
say I could get a rate of 1.5% over euribor to bring the rate to 5.3%, this would make a saving of €4000 pa ,would this be a realistic figure to try and acheive on this size of loan?
Click to expand...

EBS are advertising rates of 4.75% and 5.00% for less than 75% LTV and greater than 75% LTV, so I don't see why not . . .

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Hi Kev,
I currently reviewing some commercial properties and wondering do you need to put a propert business plan together before approaching any banks.

Do you mind me asking what type of commercial property did you buy.

Thanks
 
Hi clare,

at the time I did not need to submit a business plan because I had the tenant lined up to take the property on a 35 year lease with 5 year upward only rent reviews before I purchased so as you can imagine the bank was quite happy to do business ,the property was previously a bank outlet and is now a bookie shop.



Incidently I have just seen an advert for CMG mortgage brokers advertising interest only investment mortgages for .75% above ECB ,interest only,must make a call........
 
0.75% above ECB for investment properties is the rate I was talking about (ECB= 3.5% + 0.75% = 4.25%). To qualify you need a loan in excess of 500k and a LTV under 80%

It does not apply to Commerical properties.

The only way someone can determine the interest rate for your retail unit is by looking over the whole application.
 
Why should there be a differerence between investment residential properties and investment commercial properties?,If I was a banker I would certainly prefer to loan to somebody who has a gauranteed rental stream for a long term (in my case 35 years ),upward only rent reviews etc,rather than resedential where you have the times properties are vacant between tenants ,rental fluctuations ,low yields ,and so on.
It sems to me to be an unfair situation.
 
Because they are assessed differently and the underwriters have different areas of expertise.

Residential investment properties or RIPs are assessed like a mortgage. Affordability, rate and expected rental returns being the major determining factors.

Commercial deals look at the bigger picture and require the following to be assessed:
Details of the proposal itself (location etc.)
Details of the promoters/ previous experience/ loan requirements
A valuation of the property/site to be purchased
Development details (builders/costings) or tenant/lease details if the proposal is property investment.
A statement of affairs for the promoters behind the deal.
Any relevant accounts for the promoter.

So basically a full business plan has to be submitted.
 
These rate differences are general only. Commercial rates with banks are negotiable depending on the circumstances of the transaction i.e. LTV ratio, amount to be borrowed, term, dependancy of income sttream. Going on the circumstances of your case you have a lot of negotiation strength. Put the details of the transaction on paper. Doesn't have to be a formal business plan but clearly set down the pertinent issues and bring it to a number of different institutions to get a rate quote. Don't do this over the telephone as you will only get the best rate by individual negotiation. It will be well worth the effort as you will see for the different rates quoted. Don't forget to include other charges such as valuation mortgage etc.
 
BrenG,
as J Healy Rae says "its time to oil the chain of the bicycle",will get out there and see how it goes,Do you have any info on the legal side of switching?Is it a relatively straight forward process or can it be tedious like most legal procedures?
 
With competition for good lending tough out there everything is negotiable. Going on the info you originally supplied you are a seller in a buyers market so my advice would be agressive negotiation on all issues.
 
Kevv12

Just got 850k @ 5.7% on commercial loan , 20 years interest only 5, give me a pm and I will pass on details
 
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