Commercial Property Mortgages - 'non recourse'

J

JJ2000

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Hi

I read in the Sunday Times yesterday (Business/Money section) that commercial mortgages are "non recourse" meaning that should you get into severe difficulty and can't service the loan (even after you sell, or you plain just can't sell), the Bank can't chase assets outside those were provided as the guarantee (i.e. the factory/office/warehouse)

I was wondering:

(a) Is this generally true in Ireland - I'm thinking of buying an office premises and therefore taking out a commercial mge (I know the rates are typically higher, and the LTV lower, but the non-recourse is a "plus" in terms of reducing my risk to my home [or is it?])

(b) which lenders in Ireland offer non-recourse commercial mges?

(c) does anyone know which is the best deal in terms of commercial mges out there?

Thanks in advance...
 
Re: Commercial Property - non recourse

I think that the bank will consider all aspects of the loan before determining the rate that they will charge. The greater the risk the higher the rate so while a non recourse rate is available (I currently have one from AIB) you may have to pay more for it.
 
Re: Commercial Property - non recourse

Thanks for that - I was chatting to Bank of Scotland recently and they mentioned that they're commercial mortgages are usually only secured against the commercial property itself.
 
Typically a borrower will only be in a position to argue that the bank's security will be "non-recourse" to the borrower's other assets when the loan to value on the commercial asset is sufficient to allow the bank to recover all the monies advanced for the commercial asset from appointing a receiver over the commercial asset.

Every situation is different, but I would have thought that non-recourse lending would really only be available in tax investment (for hotels, private hospitals, creches, nursing homes and student accomodation say) or leveraged buy out deals where significant equity is being invested.

As a rule of thumb you might say that the loan to value should be 70% or lower. i.e. the loan only represents 70% of the value of the asset.
 
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