What 'Type' of mortgage
do you need
We often answer a call from an investor requesting a certain type of mortgage, quite often we hear, " Hi, I need a commercial mortgage please". Sometimes, once we have gone through the basics, it is discovered that actually, a commercial mortgage is not required and there are cheaper options available. Below we give some details about different types of mortgages, but we will always talk through your individual property and plans to determine what type you need and help you achieve the right kind of lending.
What is your property used for, or what do you intend to use it for? This is one of the main defining factors in deciding what type of mortgage you will need.
This is the term most often used when someone is purchasing a property to reside in personally, normally as their own main residence however some people do have second homes on residential mortgages too.
Bridging finance is most commonly used for short term borrowing, where the borrower wants to invest in a refurbishment of a property, get the works done and sell or to chain break a sale and purchase.
Buy to Let Mortgage
The most common type of mortgage for investors purchasing single family units, HMO's and Multi-Unit freehold blocks, this is both personally & within Limited company structures.
Development Finance is most often used where a property is being purchased in a particularly bad state and need works which involve planning consent, significant restructure and other projects like building projects
A mortgage secured against a property which is/will be used for commercial purposes.
This would include but is not limited to:
Care homes, office buildings, shops & warehouses.
Often when an investor is purchasing via a Limited company structure this can be referred to as a corporate mortgage, however this method of investing is so common now that the 'corporate mortgage' is a largely redundant term now.
Why does it matter?
We have spoken to clients who have taken commercial mortgages against a set of properties in order to have 1 loan against all properties because they believed this was the only way this kind of structure could be achieved. This has been more expensive & less flexible than necessary.
We have also seen examples in the past where a property was mortgaged on a more expensive HMO mortgage where in reality it could have been put on a standard buy to let mortgage perfectly legitimately because different lenders define different uses in different ways.
Its important that you get the right type of loan for your type of property so you are not paying more than you need to.
We don't want to detail every possible scenario here as reading through would become a real task, so if you want some guidance on whet type of mortgage you may need, call us. We are a friendly bunch and we always promise, no heavy sales tactics & no pressure