Commercial mortgage brokers specialize in helping individuals and businesses find and secure finance for commercial properties. Commercial mortgage brokers can benefit their customers in several ways, including using their expert knowledge to advise on which commercial mortgage lenders and products are best suited to their customer’s needs, completing the mortgage application on their behalf and communicating with the lender and conveyancer to completion.
We’ll examine each of the benefits of using a commercial mortgage broker below:
Expert knowledge of commercial mortgage lenders
The commercial property market is complex and diverse. There are many small- and mid-scale lenders, often specialized by geographic region and the type of commercial property covered. In addition, because each property-borrower combination is unique, all commercial mortgages are custom products. There is little standardization between lenders with regards to the fundamental aspects of the mortgage, such as maximum loan-to-value (LTV) ratios, borrower types, property types, interest rates charged, or debt coverage ratios required. This allows a commercial mortgage broker to create value for clients by being aware of lender preferences and idiosyncrasies and enabling access to a wide range of lenders.
Application guidance and advice
Besides providing general assistance in completing the application form accurately, a mortgage broker can provide technical advice on factors such as the use of a bridging or development loan compared to a traditional mortgage, as well as handling communication with the lender. This can be particularly important since commercial mortgage lenders are often accustomed to dealing only with brokers and fellow professionals, and their communication may contain a lot of assumptions, industry terminology and implicit understanding of norms, which may be confusing for the non-specialist.
General knowledge of the commercial mortgage market
Commercial properties are a high-value but infrequent transaction for buyers. Buyers may not be informed about market factors and prevailing trends, such as availability of credit or the nature of standard mortgage covenants for specific commercial property types. Here, the broker can provide a source of expert advice on the commercial mortgage market in general.
Facilitating access to commercial property experts
While mortgage brokers are not usually property experts themselves, they will have a network of appraisers, solicitors, surveyors and other market professionals to consult in order to provide the buyer with a separate source of advice, independent from the lender.
This can take many forms. For example, the borrower may want to purchase additional premises of the same type (such as shops, offices or warehouses), often in a nearby area. The mortgage broker can then provide advice on factors such as to how to purchase or re-mortgage the properties efficiently as a portfolio (i.e. distributing borrowing between premises), in order to receive the most competitive quotes from lenders.
Ultimately, while the commercial mortgage market can be very complex, the role of a commercial mortgage broker is centred around using their technical skill, market knowledge and professional network to guide each client to the most appropriate mortgage solution for their needs.
If you still have any unanswered questions, you may be interested in learning more about commercial mortgage brokers.
Alternatively, you can find the best-rated brokers in our commercial mortgage broker directory.