Speaking on the Roma Finance ‘Evolving high street’ discussion, hosted by Specialist Lending Solutions, Joe Aston, national sales manager at Vantage Finance, said “greater due diligence,” was needed for commercial cases.
He said that while some buy to let and commercial cases were comparable with regards to debt service cover and rental income, there was more to it.
“You want to keep an eye out for strength in the tenant, strength in the lease. Whether there are any break clauses and actually, is there a strong covenant on that site?
“How is the payment history in the last 12 months? Because crucially now, that’s vitally important.”
He also said it was a broker’s job to set the client’s realistic expectations and to prepare them for typically higher loan rates and the fact they would not be able to go to a mainstream lender.
Knowing the difference between an owner-occupier mortgage compared to a commercial investment before looking to place a case was also essential, he added.
Aston said: “Understand that it’s a very different proposition. If the company is buying the site, you need to get a really good understanding of their accounts, and how their financials look, before you even approach a lender.
“If in doubt, consult the experts. Use the help, and hopefully you’ll have a successful result.”
Watch the full panel debate [08:50] below, chaired by former editor of Specialist Lending Solutions, Owain Thomas, and featuring Harry Landy, MD, Enterprise Finance, Joe Aston, national sales manager Vantage Finance and Nick Jones, formerly commercial director at Roma Finance.