The flexibility of commercial mortgages is much greater than residential property loans. However, the Revolution team often gets asked about how bad credit could impact the application process. You can get a commercial mortgage even if you have bad credit. A few lenders won’t consider a bad credit mortgage. An experienced broker can help you get a good deal and even secure approval. We’ll be discussing the basics of bad credit commercial mortgages and what you can expect.
Commercial Mortgages with a Low Credit Score
You could have bad credit, but there are many reasons. In some cases, this is because you have not borrowed any money and have not made repayments. One thing to keep in mind is that commercial mortgage lenders won’t be interested in credit scores of any kind. They will only be concerned about adverse financial records.
Commercial mortgages are unregulated, which means they have more scope for negotiation. To mitigate perceived risk, brokers can provide information such as the severity, age, and reason for any credit problems that may exist in order to minimize any potential risks.
Business mortgages with defaults on your credit file
A default is worse than a late payment. It’s better to wait 12 months to increase the number potential lenders who will assist you. If you’ve resolved any credit issues and have maintained good financial standing, specialists in bad credit mortgage brokers might be able to help.
After Repossession, Apply for a Commercial Mortgage
Repossession and bankruptcy are more difficult because lenders, especially high-street banks, won’t lend to applicants with such severe credit issues.
A lot depends on:
What date was the repossession?
All surrounding circumstances.
The amount of money involved with repossession.
Your chances of getting approved for a mortgage are greater if your credit history is more recent. Again, a specialist in bad credit may be your best option.
Is it possible to get a business mortgage with bad credit?
Commercial mortgages are more flexible than residential mortgages, and a lender will be able take into consideration the nature and timing of credit problems. To make a decision, they will also consider other eligibility metrics and figures.
Profit Margin: Lenders will evaluate your business’ profitability. Although there is no minimum operating profit requirement for lenders, the more stable your business is, the better the interest rates you will get (even if it has some bad credit issues).
Commercial mortgages require deposits starting at 20%, and sometimes closer to 40%. You can reduce the risk of bad credit by making a larger deposit or add an asset to your business.
Trading History: Although some lenders will offer start-up loans, a normal mortgage lender would prefer to lend to businesses with good track records and industry experience.
Your business plan is essential. This will outline how the mortgage financing will benefit your business, and help you develop a long-term strategy for increasing revenue and profitability.
It is important to remember that even though you might have fewer lenders available, a broker who covers the whole market can help you with your application and point out any problems before you send any documents. You should not approach lenders without a thorough understanding of their approach to bad-credit lending. A rejected application could increase your problems.
Should I use a non-Status commercial mortgage provider?
We would advise against using a non-status mortgage lender for your business. It depends on your financial situation and how severe your credit score. Non-status lenders are suitable for businesses that don’t have the financial information required by conventional business mortgage providers to complete their eligibility assessments.
These lenders have been regulated by the Financial Conduct Authority (FCA). Although some non-status lenders may specialize in adverse credit applicants, the interest rates are high and there is likely to be a limit on the amount you can borrow.
We recommend that you contact an independent broker before making any long-term financial decisions. Bad credit business mortgage applicants have many options to obtain competitive lending. Accepting a high interest rate might not be necessary.