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Troubleshooter

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  • 05/09/2002
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A client wants to purchase a commercial property. Should he get a commercial loan or a commercial mortgage?

It is not unusual, in business, for finance to be obtained for the purchase of an asset, which is secured on an unrelated asset. The client may have several options and must arrange the most sensible finance for their purposes. The most appropriate form of finance for purchasing a property is still a mortgage.

They need to put forward a business plan supporting the application. If they have limited experience they will need to convince the lender of their ability to run the business. Location will be a major factor in terms of trading and the demand for the property.

A formal valuation is required and will determine the size of mortgage available. A large deposit should put them in a good position to raise the funds, but they must ensure sufficient funds are held back to cover cashflow requirements.

Should the applicant encounter difficulties they will be better placed if dealing with a commercial mortgage specialist. Such lenders are more likely to work with their customers to resolve payment problems, but in order to assist your client you should not focus purely on price.

Andrew Turzynski


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