Lending Criteria for UK Commercial Mortgages

Each Lender Is Different - based upon your own individual mortgage requirements, ICAN Finance will target specific lenders whose products and criteria best suit your case. This article identifies the issues all lenders will address but the first two are the most critical.

Security - In essence, this is the property you are seeking to mortgage. The lender will instruct an independent valuer to undertake a survey.

Obviously the value of the property will be the main consideration but other issues will be addressed:

Comments by the surveyor relating to any of these issues will be picked up by the lender and further investigation may then be required. This is not uncommon however, we have a wealth of experience and will be able to guide or advise if these things arise.

Serviceability - this is simply your business' ability to repay the mortgage. Inevitably this is based upon your business' historic performance as reflected in the company accounts. Poor years, past losses, unforeseen events make the case much more difficult but if we can present a good case as to why these things happened we can often get over these hurdles!

Each lender has their own way of measuring acceptable levels of serviceability. ICAN Finance's funding proposal reflects the chosen lenders measures. This analysis can be undertaken very quickly and will give you a very good idea of the likely success of your application. The professionalism of our approach and presentation really can make the difference between success and failure - see our case studies for examples!

Credit Searches - obviously intrinsically linked to serviceability but CCJ's and / or areers on loans will cause problems. You should note that these searches would be carried out on you and your fellow directors or partners as well. If you have any concerns on this regard, ICAN Finance can assist you in getting credit searches and we can see if there are any problems and how to overcome them.

Previous Lenders / Bank Reference - this is now very routine. Bank position is normally judged on 6 months bank statements. If there are returned items many lenders will simply decline the case. There again, if you have this problem, ICAN Finance can assist in the best possible presentation of your case and by working with lenders where our track record and reputation will get the case a fair hearing.

Industry - All lenders have industries which they like and others which they don't. This forms part of their criteria which in turn forms part of ICAN Finance's targeting! There is a whole section on industry specific issues later in this page.

Term / Loan To Value - these along with other product specific features are often expressed as lending criteria. Typically the lenders ICAN Finance use will have terms up to 25 or 30 years and LTV of 75% of Market Value (see next section).

Basis of Valuation – over the years this has been a subject that has been shot through with different and changing jargon. The latest version is “Market Value” (MV) which is defined in the “Red Book,” the surveyor’s bible, as

“The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.”

A full description can be found on 3CPD's web site. (pdf, 55k).

Market value replaced Estimated Realisation Value (ERP), Estimated Restricted Realisation Value (ERRP) and Open Market Value (OMV). These may appear on old valuations if you have them. If you have any queries about the basis of valuation, ICAN Finance would be happy to assist with an explanation.