This can be a minefield in itself, with a vast number of lenders to work through, often with specialist departments and individuals to identify. Just when you think you are winning, you find your contact speaks in technical terms completely alien to you, or doesn’t have the capacity or expertise to deliver what you need.
This article is going to examine the value of seeking early advice from someone who can help navigate through the process and the benefits of working closely with an experienced Commercial Mortgage Broker.
Where do I start....?
Some might argue that it is easy to find a business or property and others spend months or even years searching for the right opportunity.
Before wasting time looking at a project that may not be financially viable, it makes sense to speak to someone who can offer an impartial view and some invaluable guidance. They may even be aware of opportunities that may be of interest to you.
First of all, it’s important to work out what your budget is and the best way to do this is by understanding all of the peripheral costs associated with your purchase, as they soon mount up.
When you know what your budget is, you can consider and even view businesses which are on the market with the confidence that you are not wasting anyone’s time, most importantly; yours!
That is what I want
When you have found the business or property you want, you are in a strong position in the eyes of an agent, as you know what your budget is. It’s a good idea at this stage, even before arranging a viewing to run your proposals past your broker to ensure that your goal is achievable.
Banks don’t simply lend against LTV (Loan to Value) and it’ important to work out how the appropriate debt can in principle be structured, so you can get the business you want.
Saving you money and introducing key partners
It can be prudent having engaged your broker early on, to ask them to submit any formal offer on your behalf. This often adds weight with agents as they know you would have been thoroughly “vetted” as a viable applicant. A broker is used to the requirements agents have at offer stage and can often add some comfort, as well as assist in negotiations if appropriate and potentially save you some money.
You will find that in order to put forward an offer, you will need a suitable solicitor lined up (which your broker may be able to introduce).
If your offer is accepted, then you will also need an independent valuation carried out and as intermediaries instruct a number of surveys every week, they can also get a good deal, as well as ensure the right firm for the job are selected as not all Valuers are on Bank Panels or have the required specialist knowledge and expertise.
Managing the process
Now you are off and running, it’s essential that you work closely with your broker and they have a very clear understanding of your requirements and expectations when it comes to securing a credit backed loan facility. Typically, brokers will only get paid when they are successful, so it’s in everyone’s interest to keep well and truly on “the same page”.
Your broker will inform you of anything you need to produce/provide to assist in the production of a detailed proposal for the lenders. They understand what all of the banks ask for in order for the application to go through smoothly and can also often help with advice, for example; on how to produce your business plan. They will also keep all relevant parties updated, so you only really need to speak to one person on a regular basis.
Once you have the offer of finance you need or a number of options to choose from, your broker will explain the finer details and ensure you are 100% happy before proceeding.
Show me the money!
When you have your offer of funding, it will typically be subject to a number of preconditions and legal requirements. Before you get your hands on the cash to complete the purchase, your broker will need to ensure each condition is being satisfied and it’s their job to monitor the process through to drawdown.
A broker can be an invaluable member of your team and can guide you through the entire process of acquiring a business or property. It’s beneficial to engage with your broker early on in the process, so that they can advise you on the Finance Market and ensure your aspirations are realistic. They will also help you plan your approach and save you time, as well as money.
Buying a property or business...? Contact Christie Finance today!