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[F235]Find A Mortgage Broker

by Chris Clarke, Chr

The role of the commercial mortgage broker in the UK has dramatically changed recently, largely because the commercial mortgage market is thriving. There are more commercial properties being sold and re-mortgaged every month than at any other time in recent history. This growth in the commercial mortgage sector is being fueled by low interest rates and attractive rental yields across a very broad spectrum of property types.

One of the first things a commercial mortgage broker will want to establish is whether the property in question is for owner occupation or for investment. This is because the methods of underwriting the two different types of property are very different.

When purchasing a commercial property for owner occupation the applicant will need to produce all the usual supporting documentation such as accounts, business plan and guarantees. There are options to self-certify the affordability for a commercial mortgage but the disproportionately higher interest rates can mean that this should be the last option. It is because of these differences in pricing between a full-status and a self cert commercial mortgage that using a commercial mortgage broker has become so important.

The amount of rent which a commercial property will achieve can be quite difficult to estimate. The surveyor will attempt to compare similar properties in order to arrive at the market rent. However, if you consider the variety of commercial properties you will appreciate that this can be very difficult to calculate.

It is the market rent which will dictate how much a borrower will be able to raise on a commercial mortgage. Market rental can be affected by the availability of other similar commercial property in immediate area, but also the suitability of the subject property for a wide variety of roles.

It is the job of a commercial mortgage broker to consider all the relevant factors and subsequently recommend the most suitable commercial lender. The lender will then look at the borrowers credit history, the rental income and property type before accepting the application.

It should be remembered that commercial leases are very different to residential ones. Residential buy to let leases are known as Assured Short-hold tenancies (AST's). These are well documented and supported in law. Commercial leases require much more thought.

The most obvious difference is that a commercial buy to let property will normally be let out for between 3 and 6 years with the tenant usually being responsible for the upkeep of the building. Having significantly longer leases is one of the attractions of commercial buy to let property, however the downside is that when empty it can take several months to find a new tenant.

In a perfect world the commercial mortgage broker would be able to place every commercial investment application with a bank or building society. This is because they offer the most competitive rates and favourable arrangement fees of all the commercial lenders. The down side is that banks and building societies tend to be more cautious and will consider all applications very carefully. The LTV's offered by banks for commercial buy to let mortgages tend to around 75% with rates as low as .9% over bank base.

The other option is to use a specialist commercial property lender, although more flexible these lenders are much more expensive. LTV's can be as high as 85% but the rates can easily creep into double figures, these lenders also charge high arrangement fees and early redemption charges. The specialist commercial lenders will normally only deal with a commercial mortgage broker and not the borrower.

Even veteran mortgage brokers agree that it is important nowadays for people who want to get mortgages and loans through brokers to get good ones : ) Most brokers who have been in the business twenty to forty years ago admit that the mortgage and loan scene at present times is far different from the one twenty to forty years ago.

Before, traditional mortgages come in fixed rate packages with the same price and the same length of paying period. Now, it's different, they have a new system called the hybrid adjustable rate loan. This is a fixed rate loan for anywhere from 3 to 5 years - then becomes an adjustable rate loan. However it may only increase or decrease by one (1) percent each year which isn't all that bad.

For instance, if your rate was at 7.0% and the next year rates went up to 9.0% your mortgage rate would only go up to an 8.0%. Now if rates went down to a 6.0% of course you would get the lower rate without having to refinance again.

Leonard Wineburgh, a broker and president of Chicago-based Dwinn Shaffer & Co tells us why things are so different in the mortgage sene now compaired to twenty to forty years ago.

Interviewed in a recent article in the National Real Estate Investor, he said that there were no prepayment penalties before because these weren't existing yet. Aside from this, he claims that there were only a handful of lenders to work with and searching for a loan was not as complex as it is now.

He also noted that loans today have different kinds of provisions that a mortgage broker must work with aside from documents such as appraisals, guidelines from Environment Protection Agency, engineering reports and other paper works that weren't available years ago. He said that the loan business is very sophisticated nowadays.

Sophisticated and always changing, yes. Loan companies keep on churning out packages and programs that offer several options and choices in mortgages. Which is a good reason why borrowers should seek a good mortgage broker.

Another reason why a borrower needs a good mortgage broker is to spare him from headaches and other expenses. With work and families taking up our time, it's difficult to keep up with interests and rates that change as frequently as the weather aside from keeping track of lenders that could offer us the lowest and best deals.

These two facts are the reasons why a mortgage broker comes in. A mortgage broker could find the lowest rates easily for their clients with their access to numerous lending contacts. Aside from this, they can negotiate provisions that could be bothersome for us to do personally and find stop-gap financing should a traditional loan comes up with some problems. A mortgage broker can also ensure that the closing for the loan or mortgage comes on schedule following the contract.

But, before getting a mortgage broker, it is important to remember that any broker is not necessarily a good broker. Some deals can either make or break depending on the broker you choose. Here are some guidelines that can help you decide the broker who is right for you:

* The mortgage broker must be affiliated to many lending institutions and should be licensed.

* The mortgage broker should be working at a reputable institution. The name of the company could be checked at the Better Business Bureau or the Chamber of Commerce.

* The mortgage broker should provide you with the names and contact numbers of people who can be contacted for credibility check.

* The mortgage broker should ask you what you want on your loan. He must ask you questions rather than on giving you lots of facts. He should prioritize what you need and should come up with ways to fit this with various deals available in the industry.

* The mortgage broker should have with him various lists of deals that he can offer. This is a good quality because if not, you might not get the best deal to fit your needs.

* The mortgage broker should be knowledgeable and competent with everything that concerns a mortgage or a loan.

* The mortgage broker should be paid on commission which will make him or her work harder for you.

* It is recommended that the mortgage broker should have a local branch near you for it to be accessible should there be any problems with your loan.

If you find a mortgage broker who has all these qualities, then you need not worry. You will be in safe hands while dealing with your mortgage.

Article Source : Vancouver Canada Real Estate

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Both Chris Clarke & Guy Delaunay are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Chris Clarke has sinced written about articles on various topics from Finances, Real Estate and Finances. Find out more about how a commercial mortgage broker can help arrange finance for commercial properties. Spectrum Business Finance have been arranging commerci. Chris Clarke's top article generates over 3600 views. Bookmark Chris Clarke to your Favourites.

Guy Delaunay has sinced written about articles on various topics from Real Estate. . Guy Delaunay's top article generates over 1900 views. Bookmark Guy Delaunay to your Favourites.