| In the not so distant past the term "buy to let | | | | and financial standing of the investor. The lender |
| commercial mortgage" would have been | | | | will ask can the borrowing costs still be paid in the |
| synonymous with "residential commercial | | | | event of the tenant defaulting? this is particularly |
| mortgage". This is because many lenders and | | | | important and the valuer may well be asked to |
| brokers regarded buy to let mortgages as | | | | comment on the likelihood or otherwise of finding |
| commercial propositions. | | | | good tenants quickly and easily. Due to this |
| Many property investors now consider a good | | | | potential for risk, a lender will also be interested in |
| mix of residential and commercial property to be | | | | verifying the stability and reliability of the |
| a requirement of a well managed portfolio. This | | | | tenant(s). |
| change in demand has forced the market to | | | | Not surprisingly, speculative investments are the |
| adapt, buy to let commercial mortgages are now | | | | hardest to fund. Very often the property is not |
| one of the fastest areas of commercial lending. | | | | pre-let, may be in need of repair or refurbishment |
| When considering the range of commercial | | | | and may not even be in a good location. For |
| investment property, the main types of buy to | | | | these reasons a lender will expect the borrower |
| let commercial mortgage products can be defined | | | | to have the means to support the buy to let |
| generally under the headings 'blue chip', 'premium', | | | | commercial mortgage from Day One - and |
| 'secondary' and 'speculative'. | | | | evidence of this will usually be required. |
| The highest quality of investment property would | | | | High street banks and building societies are most |
| be the "blue chip" investment. These properties | | | | likely to favor the blue chip or premium |
| will have very good quality tenants on a long | | | | propositions, They usually reward solid investment |
| lease, as well as occupying the best location. | | | | opportunities will very low interest rates and |
| Because of the stability of the tenant these | | | | terms. |
| properties become very attractive to the | | | | Commercial buy to let investors seeking funding |
| institutional investors, resulting in slightly inflated | | | | for the secondary type of properties have |
| values. These higher values can put pressure on | | | | historically struggled to find funding at sensible |
| the buy to let commercial mortgage by reducing | | | | rates, the challenge was being able offset the |
| yields. | | | | renal income against the higher interest rates |
| Premium investments would typically be very | | | | from the banks. Competition in this sector is |
| similar to blue chips, with perhaps the exception | | | | bringing rates down though. |
| of the quality of the tenant. Instead of a well | | | | Speculative investments continue to be a specialist |
| established business, such as a national chain or | | | | area, and unsurprisingly there are still few lenders |
| franchise, the tenant would still expected to be of | | | | prepared to back these deals unless they are |
| high standing. Because the values of these | | | | confident of the borrowers ability. |
| properties are more realistic they can offer more | | | | Buy to let commercial mortgages are helping a |
| attractive rental yields, resulting in more interest | | | | new breed of property entrepreneur seize |
| from smaller investors. | | | | opportunities. Obviously caution still needs to be |
| When examining 'Premium' buy to let commercial | | | | exercised when assessing the profitability of any |
| mortgages lenders will question the experience | | | | commercial property investment. |