Commercial Mortgage Rate

C

charliehorse

Registered User
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Hi All
I am paying SVR 6.69% on my commercial mortgage. The premises is worth at least €250k not counting business. There is c.€85k left to pay.
I live in the premises alone. I cannot get a mortgage with my bank despite being in business 25 years (with them) and with my bank always in the black.
They site the fact that they would have trouble throwing me out if I defaulted on the payments seeing that I also live on the premises.
The premises is commercial but I have been living upstairs for twenty years and have paid my LPT on the upstairs. I pay commercial rates on the premises too.
I had to remortgage in 2004 due to separation. There is around eight years left.
Can anyone offer any advise on getting a lower rate?
BTW, can anyone beat that rate?
 
It's an extraordinary high rate and you should certainly shop around. The key issue is repayment ability rather than loan to value. Assuming that your income comes from the business, how good are your accounts? If they have consistently shown a reasonable profit level and meet your living expenses with adequate spare cash to meet loan repayments, then you should have a good chance of obtaining finance from another bank at a lower rate. Call in to a couple of banks to discuss the outline of your proposal and they should give you some indication of the liklihood of a successful outcome.
 
Thanks for the reply Brendan.
My accounts are good and have been for years. I have a good cash balance despite a slowdown in business.
Always in the black and business has always been self financing. I started in the last recession so know how to cope.
If I cannot get a better deal, I may just pay off the mortgage early and pay the income tax, but would rather keep the cash for a cushion if I get sick or the like as I am not entitled to social welfare.
I tried my current bank who I have been with for twenty five years and am getting the runaround. The mortgage is with a different bank.
Basically, they are afraid that they will not be able to evict me because I live there (Family home).
I have tried to get a reduction in the rate but got the stone wall treatment. I have no problem paying it and even offered to increase the payments for a better deal.
I have never been in trouble financially with any institution. I think the interest rate is gone beyond a joke at this stage.
 
Hello,

Does the residential part of the property have it's own access, or is entry via the commercial part of the property ?

Banks are more attracted to two seperate, stand alone entrances as it helps facilitate breaking the property up, in the event that a forced sale is required.

Furthermore, is the property on one title or two, if two then again it would be more attractive to a lender - infact in theory, you could have a homeloan on the residential title and seperately, a commercial loan on the commercial property.

If the title is all one at present, you may struggle to attract new lenders. Perhaps explore the possibility of splitting the title, to seperate the residential and commercial elements with the Banks and if they are favorably disposed to it, then explore the costs with a solicitor etc.
 
Thanks for the reply Earl,
I did look at splitting the place. It does have separate entrances.
I will try another solicitor. When the issue was up before, one solicitor I spoke to was reluctant to go into it.
She said that it would not be worth the trouble getting two folio numbers.
I bought and rebuilt the place twenty years ago during the last recession and moved into the top because I could not get another mortgage for a house.
Would it be for the local authorities to re zone the place or would it be a legal thing?
I have been told I have planning permission by default because I have been living there for so long without objection.
One suggestion was to do that and get a standard non commercial mortgage at the better rate on the apartment and pay off the commercial one with that.
I think my risk level is very small looking at my track record.
 
From my own banking experience the commercial/residential mix does tend to be a major negative. A split of the title, provided both units could be sold on independently could be a solution. However, you would need to be a satisfactory credit risk for a mortgage. I acknowledge the good repayment track record is a positive, but do your accounts actually show a steady level of profitability over the last 3 years? this is one of the problems faced by sole traders looking for finance! The Bank will assess the EBITDA (look it up!) of the business over a minimum 3 year accounts period and use that as the maximum income parameter in assessing ability to service loans. They will also add a stress test of 3/4% above current interest rates. This is a high bar to cross for sole traders.
You have stated that you have savings and I accept that the "rainy day" fund does offer comfort. However, given the current low deposit rates, these savings are costing you the bulk of 6.7% pa for this comfort. You might consider using at least some of the funds to reduce the mortgage. It's a risk, but one worth looking at!!
 
Thanks Brendan for your time.
I do pay corporation tax every year and my own income tax as an employee of my own company.
I might not be accumulating as fast as in the silly times but my bank is not going backwards.
I will look at paying off a lump of the mortgage with personal savings and then talking to the banks again about the possibility of some sort of a cheaper loan to pay off the balance. I have some reserves in my company too. The mortgage is in my personal name so the bank that has my trading a/c are reluctant to give me a cheaper loan even with this money is on deposit with them. They are paying me less that 1% for the money on deposit and zero for the cash in my trading a/c.
I just got off the phone from the bank that the mortgage is with. They basically said that if I can afford to pay, they will not reduce the rate.
I know I am not in a very bad place compared to some, but I do not like paying for the mistakes of others. This is my only debt.
 
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