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‘Business As Usual’
Commercial Mortgage specialist, Bedrock Business Finance can confirm that it is ‘business as usual’ as far as arranging mortgages for hotels and guest houses.
The much publicized ‘credit crunch’ has seen a small downturn in consumer confidence but the reality is that this problem was not caused by irresponsible lending, but is due to a liquidity problem through poor investment decisions by the financial institutions.
This has had an impact on residential mortgages and the products available within this market in terms of loan to value and pricing. The commercial mortgage market has been largely unaffected and has seen very few product withdrawals.
With this in mind we can report that commercial lenders are very much open for business and still have an appetite to lend to purchasers of hotels and guest houses. There are still and will remain to be a wide range of lenders and products available throughout the commercial mortgage market.
We believe that sellers can be confident in achieving a sale of their property provided that it is sensibly priced in relation to its size, trading performance and future potential.
It is fair to say that pricing has risen slightly in terms of the margin above base rate, although this has been offset by the recent reductions in bank base rate. At Bedrock, however, we still have access to extremely competitive terms due to our relationship with all the lenders and the volumes of business we underwrite.
In fact given the current conditions it is probably more important than ever that purchasers take the opportunity to speak to a commercial specialist to ensure they are obtaining the best possible mortgage product.
Lenders will want to see a well presented proposition which provides information about the business being purchased, the financial performance of the business and the ability of the applicants to run and manage the business. This information, presented in a concise and professional way, will provide reassurance to the lender and enhance the chances of the mortgage being approved.
Buyers who require a business mortgage can be comforted by the fact that there are plenty of alternatives, and there is still mortgage products available on a ‘self certification’ or ‘projection led’ basis. This type of product will suit business that may have been run as ‘lifestyle’ business by existing owners and may not have strong trading information. Again, sellers who fit this category should be aware that potential buyers of their business still have access to commercial finance.
In summary, commercial mortgages for hotels and guest houses are available at competitive rates and the outlook remains positive.
We would recommend speaking to a commercial broker as they can source mortgages from the whole of the market and negotiate interest rates and fees on behalf of buyers.