£600,000 funding to buy premisesPublished on 24th January 2020 2020-01-24T12:00:00+00:00 - Last update on 26th January 2020 2020-01-26T22:45:43+00:00
Cutting the cost of Property Finance
As an accountant, you will be fully aware of the advantages of buying your business premises. Financially, it will provide an appreciating asset. In terms of professional status, having the right premises can be important when dealing with high net worth individuals and corporate clients.
You will need:
- Ample space for partners, for support staff, for waiting clients and for records
- Parking for yourself and your staff, and for clients.
- An environment that is appropriate for a professional practice
The size and location requirements will mean costs will be high. Getting the most competitive funding for your premises is, therefore, vital for the continued profitability of your practice.
We recently helped arrange £600,000 funding to help an established accountancy partnership cut the cost of buying their premises.
The client's challenge
Our client was a partnership based in a large town in the south of England. They had their premises in a Georgian building in an ideal position close to the town centre, with car parking at the rear.
The partners were buying their premises with the help of a loan from a high street bank that had been negotiated more than 15 years ago.
There was around £600,000 remaining on the Commercial Mortgage and the partners, of course, saw that that rising property prices had ensured that they would now be entitled to a substantially more attractive LTV - and a more attractive rate.
“We were paying 6% for the property. It was pretty clear to all of us that we should be paying rather less than that for a commercial mortgage these days. Rangewell had helped some of our clients find better rates for finance, so we decided to see what they could do for us.”
What is a Commercial Mortgage?
Commercial Mortgages are among the most common forms of finance for commercial property.
They operate much like a residential mortgage, with a large loan secured on the property itself. However, while residential mortgages are designed as a standard offering for a mass market, all Commercial Mortgages are arranged on an individual basis. This means that lenders will look at the practice as a business, and scrutinise its accounts and forecasts to ensure that its long-term prospects are positive. Good trading history and good prospects for the future may help a borrower secure preferential rates.
For accountancy professionals with their own practice, it may be particularly simple to secure a Commercial Mortgage at a very attractive rate. This means that - with the help of the Rangewell team - it may be possible for accountants to secure a commercial mortgage at a preferential rate and significantly reduce monthly outgoings.
Why there are savings with remortgaging?
We saw that remortgaging could save our client's money for four reasons:
- The value of the property had appreciated, allowing for better Loan to Value ratios
- Interest rates, in general, are at close to record lows
- The accountancy profession can expect particularly favourable rates
- It would allow us to use our expert knowledge to find the most competitive quote across all lenders
We looked at the figures and searched our lenders. We found a high street bank who could offer a remortgage at 2.5% above the base rate. In addition, the new lender was able to spread the loan over a 20-year term, further reducing their monthly outgoings.
Existing Mortgage £600,000 at 6.00% above base rate currently 0.75% with a remaining term of 15 years
Existing monthly repayments £5,309 Annual cost £63,708.
New monthly payments of £3,403, 2.50% above base rate
Monthly saving £1,906
Annual saving £22,872
At Rangewell, we can find better answers to your property funding needs. Our experts will find the most appropriate solutions while our network of contacts and our unique online tool let us find the most cost-effective rates.
That means, whatever the need, a call to us can save you money and help your practice do more. Our service is independent, fast and absolutely free.
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