Mortgage Advisor & Director
Head of Bridging and Commercial
If you’re looking to purchase a business-related property and get a 100% loan-to-value (LTV) commercial mortgage, there are important factors to consider. We’ll explain whether it’s possible to get a mortgage with a one hundred percent LTV, how the financing arrangement works, and what to consider first.
Can you get a commercial mortgage with no deposit?
Yes, it is possible to arrange a commercial mortgage without putting down a cash deposit. The bespoke nature of these loans means that some lenders can take a flexible approach. However, a 100% LTV mortgage can be more challenging to set up, or in some cases, make it more expensive to buy commercial property.
How would this work?
This type of financing works similarly to other commercial mortgages, except you’d be buying the property without a deposit, so you’d need to secure a 100% LTV loan.
Essentially, you’d need to explore the alternatives to a traditional deposit. This minimises the borrowing risk so that your lender is comfortable with the arrangement.
Luckily, commercial lending is unregulated and largely arranged on a case-by-case basis. So, there’s no ‘one-size-fits-all’ answer. Here are a few ways to secure a business mortgage without a deposit:
- Using financial collateral - this could be a different property or high-value asset (sometimes the age of the asset is taken into consideration).
- Proving business strength - some lenders may be willing to back your purchase without a deposit if you can demonstrate a strong and healthy business track record.
- Vendor financing - in rare cases or private sales, the vendor selling the property might finance part of the purchase.
How to get a commercial mortgage with no deposit
Securing a 100% LTV commercial mortgage can be extremely challenging without expert support. Ideally, it’s best to arrange this finance through a specialist broker with experience in this niche.
Some high street lenders may be open to discussions but are likely to have stricter eligibility criteria. Your best bet is speaking with commercial lenders who can be more flexible, meaning it’s much more likely you secure a mortgage based on assets or something other than a cash deposit. Or if that’s not possible, they’re still in a position to help you explore alternative solutions to get the result you’re looking for.
You can begin a free, no-obligation chat with a commercial mortgage broker below:
Connect with a commercial mortgage specialist
Eligibility criteria
For a commercial mortgage, you’ll need to undergo a thorough risk assessment, which is likely to be more in-depth if you want to secure a business property loan without a deposit.
Eligibility requirements will vary across the pool of available lenders, but here’s an overview of the main factors:
- Deposit alternative - typically, you’d need a deposit worth around 25% of the property value. For a 100% LTV commercial mortgage, you’ll need evidence of high-value assets or an alternate plan. Also, keep in mind, some lenders may only consider a percentage of an asset’s value.
- A solid business - you’ll need to be able to show your business plan and credentials, demonstrating any past success along with explaining future forecasts to show how you’ll repay the loan.
- Credit history - lenders will check all relevant credit history, which could apply to the business and any named directors. If you (or your business) happen to have bad credit, you still have options. Commercial lending operates on a bespoke basis, so there’s a possibility for financing to be tailored to your situation.
Will the interest rates be higher?
They can be, but not always. The rate you get will depend on the overall strength of your application and the underlying business. Some lenders may charge higher rates to offset the added risk of a 100% LTV commercial mortgage, but not all of them will.
Also, each lender will have varying views on what you’re using instead of a deposit. For example, some may not offer competitive rates if you’re using a second-charge mortgage on an existing property instead of a deposit, but others will.
Specialist lenders deal with plenty of clients facing the obstacle of no deposit. Each situation is unique, but boutique lenders and experienced commercial mortgage brokers aim to problem-solve rather than put up barriers.
Which lenders offer this type of commercial mortgage?
Most commercial lenders who offer 100% LTV mortgage options won’t publicly advertise these deals, because they’re arranged individually. Examples of lenders with flexible lending criteria include the likes of Aldermore and Shawbrook Bank along with challenger banks like Atom and Metro Bank.
However, the complex nature of 100% LTV commercial mortgage financing means that your best bet is getting an introduction to the right specialist lender through an expert broker.
Tips for quickly raising a deposit
If you think a 100% LTV commercial mortgage isn’t a realistic option for you, there are still ways you can raise a deposit quickly:
- Explore temporary finance: Products like commercial bridging loans are designed for this exact type of situation.
- Consider partnering: working with another business or investor can open up more funds to use as a deposit.
- Look into government support: There are sometimes government support and schemes designed to support businesses in particular sectors or regions.
Why choose Teito for your commercial mortgage?
A key benefit of commercial mortgages is their ability to be tailored to your business’s needs. However, navigating this area without specialist support is extremely difficult, especially for a 100% LTV mortgage.
At Teito, our specialist advisers have proven experience in this particular area of commercial borrowing. We offer a free, no-obligation consultation where you can discuss your situation and options with an impartial commercial mortgage broker who can help you find the most affordable solution.
Here are just some of the reasons people choose us for their mortgage needs:
- Our brokers specialise in 100% LTV commercial mortgages
- Your first consultation is free with no obligation to proceed
- We are 5-star rated on leading review websites
- We won’t leave any marks on your credit reports
Ready to take advantage of a free, no-obligation chat with a broker who specialises in 100% LTV commercial mortgages? Get started here.
FAQs
A few might, but it’s rare. These loans need to be arranged on a case-by-case basis and most banks don’t have the time or willingness to go through this process. Whereas specialist lenders are more likely to offer bespoke borrowing solutions tailored to your business needs.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.