Frequently asked questions (FAQs)
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Why use commercial mortgage brokers?
Commercial mortgage brokers are a good source of information, they know which specific lender can meet the client's individual needs, they understand how the lender works and can save valuable time for the client by processing the application swiftly.
What costs am I likely to incur?
All reputable commercial lenders charge an arrangement fee and expect clients to cover the cost of their legal fees and valuation. In using a broker, you would also expect to pay around 1% of the loan advance although on small loan advances a minimum fee may apply. Be wary of paying any up front fees; make sure you see what you are getting for your money first!
When should I pay these costs?
Most lending institutions will either issue an offer "in-principle" or arrange a meeting prior to requesting payment for the valuation fee. You can then investigate the lender and confirm their lending terms before committing yourself. The broker's fee can either be paid on formal offer of finance or completion, depending on how the broker operates. The lender's arrangement fee and legal costs are normally paid on draw down of the loan.
When should I pay an administration fee to a broker?
The administration fee is paid once the broker has assessed your application and confirms that lenders are willing to assist. You can then request details of the lender and terms in writing from them to verify this. Usually the broker will schedule a meeting for you with the lenders at this stage or arrange a valuation in accordance with the lender's requirements.
How long does it take for a commercial mortgage to be finalised?
From the time of initial enquiry to completion of the loan, normally takes around 3 months. Obviously, some applications can happen sooner and some later depending upon the various parties involved i.e. solicitors, lenders, broker. With regards to bridging funding, this can normally be completed within a 2 week process.