Christchurch Investment Management Limited are a firm of Independent Financial Advisors, which means we have access to all commercial and residential lenders operating in the marketplace. We are regulated by the Financial Services Authority (FSA) for investment business, mortgages* and general insurance and aim to provide a “one stop shop” with regards to the financing and purchase of your commercial unit.
We have approached three main high street lenders (Barclays, Natwest and Bank of Scotland) in relation to this site and these lenders have already been provided with details of the site.
It is possible to provide commercial finance either on an individual basis or in the name of your company and we aim to provide a commercial lending solution most appropriate to your current business needs.
There is no “standard lending criteria” for a commercial loan, each case is looked at and formally underwritten on an individual basis. It is possible to borrow up to 75% of the valuation of the property over a suitable repayment term with flexible options built in.
An example of the costs involved;
a loan of £450,000 in relation to a proposed purchase price of £600,000.
| 1) Purchase price | £600,000 |
| 2) Loan amount at 75% | £450,000 |
| 3) Term of loan 25 years | |
| 4) Interest rates set at 1.5% over bank base rate (currently 5.75%) |
Arrangement fee 1% (can be added to the loan)
Normal capital repayment over 25 years would be £3,252.63 per calendar month.
Alternatively if you were to take a 2 year capital repayment holiday, then the interest only payments, would amount to £2,718.75 per calendar month with the capital repayment over the following 23 years at £3,355.10 per calendar month.
The above figures are provided by Barclays Bank. As the interest rate is variable the monthly repayments will change if the bank base rate changes and will increase or decrease accordingly.
Assuming rent @ £16 per sq ft, a similar sized unit would cost approx. £4,075 per month to rent (including service charge). This rental figure quoted is from the agents, Colliers.
You may also qualify for a grant from the European Investment Bank, under their loan support scheme. (Any application for this would be handled by Barclays. These grants can vary, depending on the size of the loan, it must be at least £100,000 and have a term of at least three years and could be anywhere from £500 to several thousand pounds.)
The above information is provided only as an example. A formal illustration will be provided by the relevant lender once an application has been submitted.
All three lenders can provide decisions in principle very quickly on receipt of the following information:
As an alternative to providing normal commercial finance it may well be possible to utilise pension funds to purchase your commercial premises:
The acquisition of commercial property has become one of the most popular methods of retirement planning. Uncertain equity markets combined with a finite supply of property and land, have led to a dramatic increase in those seeking a cost efficient pension wrapper for this type of investment.
The combination of tax relief on pension contributions, with tax-free rental income and capital growth on the underlying investment, make owning commercial property via a Self Invested Personal Pension (SIPP), an extremely desirable package.
Under current legislation, it is possible to borrow up to 50% of the value of the pension fund The fund can include contributions or transferring existing pension funds into the SIPP.
For example: using a unit purchase price of £600,000
| Existing pension funds [E.g. personal plans or deferred benefits under company schemes] |
£400,000 |
| Borrowing | £200,000 |
| Purchase Price | £600,000 |
[Full details re the associated costs and the tax implications, e.g. VAT, can be provided on a specific quote/case basis]
Groups of individuals, whether business (e.g. company directors), or a family connected (e.g. husband and wife), can join together thereby aggregating several pension funds as a joint venture, each member having his/her own identifiable share.
Whether for your own use or an investment, the use of a pension wrapper enhances the tax efficiency of commercial property purchase.
NOTE: The above is not advice but merely an example of a way of purchasing commercial property. Advice should be sought as to the suitability of using pensions for commercial property purchase.
None of the lenders will insist on business banking being moved to them, although they will obviously try and persuade you to do so! It is also not a condition of the loan that life cover is taken out although this may be prudent to put in place. Christchurch Investment Management Ltd. can provide you with the relevant illustrations in this regard.
Christchurch Investment Management Ltd’s fee will be paid by the lender and as such we will not charge you any fees for putting in place the commercial loan. We may also earn commission from any ancillary products, such as life cover, taken out in conjunction with the loan. Any commission we expect to earn will be disclosed to you.
Christchurch Investment Management Ltd has also negotiated special terms with regards to legal services and Buildings Insurance. Our recommended solicitors are Wedlake Bell based in London.
The Solicitor’s fee structure is the same whether or not the purchaser pays cash or applies for a loan.
The fee structure is as follows:-
| For units priced up to £500,000: | £1,300 plus VAT and disbursements |
| For units priced between £500,001 and £750,000: | £1,600 plus VAT and disbursements |
| For units priced in excess of £750,001: | by negotiation |
The buyer should also be aware that other outgoings will include:-
The service provided by Wedlake Bell includes personal contact with the buyer at all times so that the buyer will obtain regular progress reports and the solicitor will be available to answer a buyer’s queries at all times.
If you are interested in receiving further information on commercial loans, Pension Fund investment or the referral solicitors’ legal services please contact:
David Thornberry
Christchurch Investment Management Ltd.
4th Floor, 42 Moorgate, London EC2R 6EL
Direct Tel: 020 7826 4370
E-mail: dgt@christchurch-financial.com
*NOTE: The FSA does not regulate commercial mortgage.
This article is produced based on our current understanding of law and tax legislation which may be subject to change.