Funding Spaces - Care Home Mortgage Brokers
Funding Space are a team of finance professionals specializing in mortgages for the care home sector. Our expertise lies in providing tailored mortgage solutions that cater to the unique needs of care home operators, from small family-run homes to large corporate entities.
Our services include sourcing and arranging mortgages for the purchase of new properties, refinancing existing mortgages, or restructuring debt. We understand the financial challenges that care home operators face, and we’re here to help you overcome them with our bespoke mortgage solutions.
With our extensive network of lenders and our deep understanding of the care home industry, we’re able to secure competitive rates and flexible terms for our clients. Our commitment to personalized service means we work closely with you to understand your needs and find the best possible solution. Let us be your trusted partner in securing the mortgages you need to grow and sustain your care home
Welcome to our Specialist Care Home Mortgage Brokerage!
Buying or refinancing a non-residential or commercial building for care home purposes often involves navigating the realm of commercial mortgages. This guide demystifies the essential components of commercial mortgages, providing clarity for care home owners, managers, and finance directors.
What is a Commercial Mortgage?
A commercial mortgage is a secured loan against a non-residential or commercial property, utilized for either purchase or refinancing. It extends its reach to finance mixed-use premises or even land. The two fundamental types of commercial mortgages are fixed-rate and variable-rate, with lending criteria negotiated on a case-by-case basis. Borrowing over the long term offers savings compared to shorter-term financing alternatives like bridging loans or regular business loans.
The eligibility criteria encompass a minimum age of 18, with no upper age limit. Commonly chosen commercial mortgages include:
Owner Occupied: Acquiring a property for the buyer's own business or leasing to another business with shared shareholders or directors.
Commercial Buy-to-Let: Letting the property to another business for their trading base, akin to residential buy-to-let mortgages but for commercial property.
Interest Only / Capital Repayment: While most lending follows a capital repayment basis, some specialist lenders offer interest-only alternatives at higher interest rates.
Who is Eligible?
Commercial mortgages are accessible to a broad spectrum of individuals and entities, including business owners, property investors, sole traders, partnerships, limited companies, and limited liability partnerships. Three main types of lenders—high street banks, challenger banks, and specialist commercial lenders—offer varying degrees of flexibility, cost, and criteria.
The borrowing amount is determined by the loan-to-value (LTV) ratio and the applicant meeting the lender's affordability criteria. In sectors like manufacturing, the typical highest LTV is 80%, but a more practical upper limit is often considered at 70%. The lender evaluates both the business and property values when making an offer.
Pros and Cons of Commercial Mortgages
Advantages:
- Growing Flexibility: Increasing providers contribute to greater flexibility in commercial mortgages.
- Tax-Deductible Interest: Interest paid on a commercial mortgage is tax-deductible.
- Higher Yields: Investing in commercial property can yield higher returns than similar residential investments.
- No Maximum Loan Size: If meeting criteria, there is no set maximum loan size.
- Inclusion of Adverse Credit Histories: Applicants with adverse credit histories are not necessarily excluded.
Disadvantages:
- Affordability Calculation: Affordability is often calculated by setting a percentage over the mortgage payments, introducing specific criteria.
- Higher Interest Rates for Risky Properties: Properties of questionable quality or businesses deemed high-risk may incur higher interest rates.
How Can We Help?
Navigating the market involves selecting between fixed and variable rate deals, with mortgage terms ranging from one year to 30 years. Options include interest-only, capital repayment, or a combination, often with no broker fees for loans of £100,000 or more. Deciding whether to fix interest rates depends on risk tolerance. Expert assistance helps secure the best deal, considering factors like set-up fees, arrangement fees, valuation fees, legal fees, and Stamp Duty.
A good broker manages the entire application process, leveraging experience and contacts to secure the best deal. Lenders typically require six months of business bank statements, two years of trading accounts, and details of credit ratings. Seeking expert advice is crucial, especially when considering interest-only options.
Embarking on a commercial mortgage journey for care home purposes demands informed decision-making, expert guidance, and a comprehensive understanding of the associated components. Careful consideration and consultation with experts ensure that care home professionals secure the most favorable terms tailored to their unique circumstances.
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