Aug
05
How do commercial mortgages work?
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What are they based on? Are they based on the value of the business you are buying, or on your personal assets or on a mix of both?
Repossession
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1 Comments
July 21st, 2009 at 8:29 pm
The first thing a lender will look at is the value of the property itself, so that if the business failed, what could they sell the closed premises for. Then they will consider the profitability of the existing business to see what the current occupier could afford to pay were he their customer, so they will look at the net profit shown and add back depreciation and any loan costs personal to that operator. That gives them an idea of what they will lend on that business. If there is a not considerable shortfall between that and your cash deposit they will then consider taking security over other assets either by a second charge or remortgaging to include the money required.