Business finance · 6 min read
Commercial mortgage checklist: premises, investment or refinance
This checklist is for a business owner buying premises or an investor buying or refinancing commercial property. Prepare a coherent case, not a large folder of unexplained documents. The lender will decide the exact evidence it needs.
Published by The Finance Place · Updated
Write the transaction on one page
State who is borrowing, who will own the building, who will occupy it and what the money is for. Include the price or value, deposit, target loan, costs and proposed completion date. A company borrowing to buy a director-owned building needs a different explanation from an investor buying a property with a third-party tenant.
For owner-occupied premises, show sustainable cash
Bring filed accounts, current management figures, business bank statements and existing debt commitments. Explain one-off income or costs rather than assuming a lender will adjust profit the same way you do.
- Prepare a forecast after the new mortgage, property costs, tax and normal business overheads.
- Compare the ownership commitment with the rent being replaced without overlooking repairs and cash tied up in the deposit.
- Explain any shorter trading history, recent fall in profit or dependence on one customer.
For investment property, explain the lease and tenant
Supply the tenancy or lease, rent schedule, break dates, expiry, rent reviews and repairing obligations. Describe arrears, concessions or vacant space. Test a void period and the costs of re-letting; a gross rental yield does not establish debt-service capacity.
Separate deposit from completion costs
A deposit is only part of the cash requirement. Obtain estimates for tax, valuation, legal work, arrangement and broker fees, and any VAT due. Keep operational cash separate from the funds committed to completion.
| Item | Cash |
|---|---|
| Deposit at an assumed 70% LTV | £150,000 |
| 2% fee on £350,000 base loan, paid in cash | £7,000 |
| Entered other transaction-cost budget | £10,000 |
| Total completion cash in this illustration | £167,000 |
On a refinance, obtain a settlement figure
Use the actual existing lender's redemption figure, including accrued interest, exit or early repayment charges. Explain any extra money being released and its purpose. Compare net proceeds, ongoing payments and total cost rather than calling all property equity available cash.
Flag title, condition and use before valuation
Record tenure, current and intended use, mixed residential/commercial areas, planning issues, property condition and any occupation by you or your family. Arrange appropriate legal, tax and finance advice before exchange. A calculator cannot establish the regulatory treatment or acceptability of the security.
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