May has seen a complete overhaul in Shawbrook’s commercial mortgage interest rates, bringing them back in line with many of their competitors, which is fantastic news! However, what is more interesting is their criteria changes, making them far more accessible to investors and far easier to use.
Removal of debentures
This happened a couple of months ago but I feel it’s worth reiterating, that as investors start buying more property in a limited company, the requirement for debentures and all monies charged is increasing the costs of legal fees and delaying completions. To have a lender who does not require either of these, is refreshing to see and makes such a difference to the cost and timescales of conveyancing.
Personal guarantees reduced to 25% of the loan amount as standard
Again, as we see more limited company lending, it is positive to see a lender taking a pragmatic approach to personal guarantee requirements.
Complex commercial product
There was a gap in the market for a product that allowed clients to finance large, complex commercial property, at an affordable rate. This product allows Shawbrook to lend on serviced offices, vacant property and large multi-unit properties where they were previously unable. With a 5 year term, it allows companies to build up a track record and open up other lending options as well.
Will consider first time property owners and landlords
Shawbrook have relaxed their criteria on first time landlords and first time buyers, allowing those with an income of over £50,000 to purchase a buy to let or HMO (up to 6 bedrooms) with no experience or minimum net worth. They don’t require any experience for their light refurbishment short term loans either, allowing clients to purchase property to renovate or convert as long as it doesn’t require any building regulation approval or planning permission, to then move to a term mortgage.
Relaxed experience criteria for commercial property
For single unit commercial and semi-commercial property where there is more than 2 years remaining on the lease, clients only need 12 months experience with one buy to let property. This allows clients to move more quickly into the commercial market, where they can often find a more steady income and higher yields. For two or more units you only need 2 years of commercial experience.
More open to looking at market value for commercial and semi commercial units
We have already seen Shawbrook look at the market value or investment value for some HMOs, including smaller 5 and 6 bedrooms. This has allowed clients to realise the uplift in value following the conversation and refurbishment, and move on to their next project with more funds released from the property.
They can now look at the market value in more instances for commercial and semi commercial property, where the following requirements are met:
- An investment grade tenant or multi-let
- The surveyor confirms the property could be re-let in a maximum of 6 months (with a maximum rent free period of 6 months) and could be sold within 12 months
- An element of capital repayment will be required to reduce the balance to a maximum of 75% of the vacant possession value during the loan term and the day one advance cannot exceed 85% of the VP value
