What is a commercial mortgage broker?

Securing a commercial mortgage for a property for your business or investment portfolio can be complicated and time-consuming. With the help of a commercial mortgage broker, you can simplify the process and secure a great deal.

A commercial mortgage broker is a financial intermediary between individuals or businesses looking to purchase commercial properties and lenders offering this type of mortgage. With access to a wide range of lenders and industry expertise, brokers help ensure you receive the best mortgage for your needs.

In this article, we discuss the benefits of using a broker and highlight the fees you can expect to pay.

Why use a commercial mortgage broker?

Working with a broker can save you time, money, and effort in obtaining a mortgage for your commercial property. To ensure you receive the benefits, it is important to find a specialist broker that can meet your specific requirements.

Break down the barrier between you and commercial lenders

Many commercial lenders only accept applications via brokers, as they rely on intermediaries to properly package and assess applications before submission. So, if you do not use a broker you are likely to miss the opportunity to consider deals from a wide range of lenders.

Get insider access to lender teams

Brokers have established relationships with an extensive variety of UK lenders. This ensures that they will quickly match you with a lender that offers specific lending criteria suited to your needs. It also means they can consult with business development managers and  underwriting teams at the lenders on the specifics of your case.

If your application has aspects within it that are on the fringe of a lender’s criteria, but the next best lender deal is going to cost you more due to a higher rate, a broker can present the details of you case, pre-application, to check if it is a good fit with the lower rate lender.

Find the best product option

Commercial mortgage brokers provide tailored advice, to ensure you receive the best mortgage for your specific needs and circumstances, from a wide range of lenders. 

A broker will work with you to understand your financial situation, future goals, and business objectives. Based on an in-depth understanding of this information, they will source a deal that will provide you with the best possible terms for your mortgage from a huge number of available products. 

A commercial mortgage broker can also help with particularly tricky scenarios or situations where someone may struggle to secure finance. 

Say for instance you are looking for a bad credit commercial mortgage. Adverse credit can make it challenging to secure financing. A broker can help you by finding lenders that are willing to work with businesses or individuals with blips in their credit history. 

Or, you may have a particularly complex property type, be investing through a complex company structure, be new to commercial property, have struggled with affordability calculations. Commercial investing in isolation is complicated, so any small thing that could present a hurdle to investment can often be readily swept away with the expertise a broker can give.

With the large amounts of money involved in investing in commercial property, why would you risk proceeding without expert help? It’s just not worth the risk.

Get 'real-time" market knowledge

Brokers have up-to-date knowledge of the mortgage market, including interest rates, market trends, lender requirements and lender service levels and turnaround times. 

A commercial property mortgage broker’s real-time market knowledge can provide individuals and businesses with these benefits:

• Current interest rates and trends: This can help you make informed decisions about when to purchase or remortgage your commercial property and what terms to look for in your mortgage. This can help you save money or make a great investment decision to build your property portfolio.
• Meeting lender criteria: A broker will advise you on the specific lender requirements that you will need to meet, to secure financing. This expert advice can speed up your application process and help ensure your deal completes.
• Insights on lender flexibility: Lenders can approach cases with differing levels of flexibility. Some are more cautious on particular aspects of a case, others may be more flexible. A broker will help you navigate through these potential obstacles.
• Terms tailored to you: Brokers gather together all the information necessary, to present your application to the lender that offers you 1) the most competitive deal cost-wise and 2) terms that meet your needs and circumstances. This means the deal will suit your immediate and future plans and minimises the risk of the deal being refused at underwriting.
• Lender service levels and turnaround times: Given brokers work alongside commercial lenders day-in, day-out, they know which lenders are most responsive, helpful and timely in processing cases. This can be a huge help in the planning stages pre-application and throughout the process.

Create a smooth path to completion

The complex nature of commercial borrowing means the application process takes longer than a standard residential mortgage and there is a lot more involved in getting the deal to completion.  

The expertise and speed of service a broker can offer upfront means you know as soon as possible which lender will offer you a good deal and takes all the due diligence and administration off your shoulders.

This can increase accuracy in communications and minimise delays in the application process. 

Brokers have an in-depth knowledge of each lender’s unique application requirements (they all differ) and cuts a clean path to getting your funds in place.

What fees do I pay to a commercial mortgage broker?

Choosing a broker that charges a fee is a very sensible approach to take. Why? Because that broker is motivated purely by what is best for you. 

For example, each lender pays a different ‘procuration fee’, which is money they pay to an intermediary (broker) for putting together a client case and in essence doing preparatory work to ensure the case is right for that lender. 

Where a lender has higher rates but offers a bigger procuration fee, an unpaid broker may be influenced to recommend that deal to you, despite it not being the most cost effective option for you.

Paying a broker a fee means you are covering the cost of their work, so they are given the ability to be thorough, tenacious and determined to exhaust every avenue to find you a cost effective solution.

Paying a broker fee also means you should expect world class customer service from first ‘Hello’ to the point the funds are paid and onwards to your renewal. It gives the broker the ability to put all the necessary resource behind servicing your needs as possible, so the process is easy, relaxing and straightforward.

Commercial mortgage broker fees are typically calculated as a percentage of the loan amount. Certain brokers may charge a set fee for their services. You might pay the broker fee once the mortgage is completed. Alternatively, the fee may be split between an upfront and a completion fee. 

Before you start working with a commercial property mortgage broker, you need to have a firm understanding of their fees. This will ensure that you fully understand the costs involved, before committing to the mortgage.

As a starting point, you can calculate commercial mortgage payments to have a better understanding of the mortgage cost. This will provide you with a monthly figure that you will need to pay each month, helping you to make an informed decision on whether to choose a mortgage or not.

Get in touch with a commercial mortgage broker at Commercial Trust

Secure a great deal and enjoy world class customer service with Commercial Trust’s commercial mortgage brokers. You will get access to a huge range of  commercial mortgage rates and lender criteria, to accommodate all sorts of properties and borrowing needs.

Contact us today to learn more about how we can help you secure a commercial mortgage.