Industrial Property Loan
Funding solutions scaled for industry
Buying industrial property can provide the premises you need for your business, or provide a rewarding investment, for development or letting out. But large-scale funding will probably be essential.
Industrial property can be the premises you need to run and grow your own manufacturing or other business. Buying it can reduce your monthly outgoings, compared with renting, and create a valuable additional asset for the future of your enterprise.
But there are other reasons to buy industrial property. It can be an investment that provides revenue, if you let out it out to generate an income, as well as capital growth. But whatever your plans, getting the most appropriate type of finance, and the most cost-effective deal to fund your industrial property purchase is essential.
Industrial property can include -
- Warehouses and storage facilities
- Manufacturing plant
- Self Storage facilities
- Factory Units
- Car Parks
- Depots and bulk storage
- Automotive Workshops
- Office Buildings
- Distribution centres
- Flex warehousing
- Steel Frame Buildings
- Industrial Units
- Marine facilities
A Commercial Mortgage is one of the most common forms of finance used to buy industrial property of all types.
Commercial Mortgages operate like residential mortgage and are simply a large loan secured on the property itself. Generally, Commercial Mortgages are for 15 years or more and, as with a residential mortgage, the premises will be at risk if you are unable to keep up your repayments.
However, there are some important differences to be aware of. One of the most significant is that the rates and terms for a Commercial Mortgage are arranged individually. Lenders will look at your business, your accounts and projections to ensure that and set interest rates based on the level of risk they believe it presents.
A sound business in a growing sector could expect to secure the best rates and terms - which can be substantially below most other types of business funding
There will also be valuation, arrangement and legal fees and additional costs for the services of professional advisors which will add substantially to the initial costs.
Because of the legal and administrative costs of setting up a Commercial Mortgage, it is uneconomical to use this type of lending to borrow less than £50,000, and some lenders have a minimum of £75,000 or more, but there is no set upper limit. For larger loans, those over £1m, we can help find lenders with bespoke terms that are tailored to your requirements.
However, you will need to make a large contribution yourself. Typical loan-to-value ratios will be a maximum of 50% of the purchase price for new businesses. Owner-occupied businesses such as offices or shops can normally get a loan-to-value of around 80%.
Commercial Mortgage deals can be either fixed-rate or variable rate, and you may also be able to choose between a repayment mortgage option, where you pay the capital and interest back each month, or an interest-only mortgage, where you only pay the interest.
Other types of business property finance
Although Commercial Mortgages are a popular form of funding for industrial property, other options exist.
Property Development Finance
Property Development Finance is a type of lending that experienced property development businesses can use to fund new building projects or refurbishment of an existing property. They may be suitable for projects, such as the conversion of a major factory site into units, or for the construction of new buildings.
Different scales of lending are available, designed to support projects from light renovation to conversion, to ground-up new builds.
Lenders may advance up to 70% of the gross development value, with terms that can be up to 24 months. Property Development Finance is usually only available for experienced developers, who have a portfolio of previous development projects to showcase their skills.
Bridging and Auction Finance
Bridging Finance is a property finance solution often used as a short-term, temporary solution for property purchase. It works like a mortgage, in that the funding is secured on the property itself but, unlike a mortgage, Bridging Finance carries a relatively high rate of interest.
It is best thought of as the means to bridge a funding gap until a more suitable long-term solution can be provided. However, it can be useful in providing large-scale funding very quickly - potentially in days, rather than the months required for other types of Property Finance.
Auction Finance is a way of arranging funding in advance of an auction. Like a Bridging Loan, it is designed to provide short-term finance. It can help you ensure that you have funding in place if you are successful at auction, and can be valuable to help you know how much you can bid on a particular property.
Raising funds with business property finance
A loan secured on industrial property can be used to provide funding for a wide range of business purposes, including:
- Purchase of supplier and competitor companies
- Expanding your existing business
- Finance to building more facilities or acquire capital assets
- Buying adjacent land or property
- Restructure existing borrowings
Property remortgaging or refinancing could let you use property you currently own as the security to raise cash at a preferential rate. Industrial Property Refinancing lets you access the investment you have already made in your factory, warehouse or other property to provide the funding to use again. If you own the property outright, all the money you raise is yours to use in any way you wish. You can also refinance a property with an existing mortgage, repay your original loan, and use any surplus cash to help build your business. You regain full title to your premises when the funds are paid off and to take advantage of rates that are exceptionally low.
Refinance can also be a solution if you want to get a better deal on your current business finance commitments.
You do not need to have paid off your current mortgage to arrange a new one. Your property will probably have appreciated in value, and the chances are that you can get a better deal on your existing loan. So if you want to reduce the monthly repayments on your current mortgage, cut the demand on your cashflow and release funds for use elsewhere in your business, refinancing your current Commercial Mortgage could help. You may be able to pay off an existing loan and replacing it with a new one at a lower cost.
Industrial Property Finance from Rangewell
All types of property involve high costs, and the scale of many industrial properties makes very high costs inevitable. It is important to have expert help to get the kind of funding that is right for your needs to keep costs down.
Even a fraction of a percentage point can make a substantial difference to what you actually pay each month, while fees and penalties can complicate the position still further. There are many different lenders who may be prepared to offer funding. Each has their own approach to interest rates and fee arrangements, and comparing offers needs an expert eye.
At Rangewell, we use our property finance expertise to support your business – and ensure that you have the financial solutions you need.
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
REAL EXAMPLES OF WHAT WE CAN DO
Help a business owner buy out his leasehold factory premises
Find finance for a business wanting to buy its office building and depot
Help arrange finance for an industrial unit operator buy an adjacent site
Source funding to allow a commercial landlord to expand his portfolio
Arrange funding for a marine engineering business to buy a dockside property
Meet real businesses who have used Industrial Property Finance
Helping you build your profits
Fast decisions from specialist lendersLenders will look at your credit profile, the value of the asset, and your exit strategy to make a decision in the shortest possible time.
Suitable for all types of property• Residential, commercial and mixed-use development • Conversion and refurbishment • Planning gain transactions • Part built development refinance
Scaled for industryIndustrial property can cost in the tens of millions. We can provide solutions to support that scale of borrowing.
Designed for your businessYour business plans are the key to securing the finance you need - a sound business plan will count for a great deal.
Releasing fundsRemortgaging an existing industrial property can provide a source of a high level of funds for your business to reinvest elsewhere.
For developersShort-term loans can provide a funding solution for industrial development projects. These can be refinanced at a higher value once work is completed and let.
Download Rangewell’s free and detailed guide to Industrial Property Finance
How does property finance work?
Why type of funding do you need for your project?
What are the costs?
What are the restrictions?
The downsides of property finance
Making the application
Key terms to check
A sound business is essentialA sound business and a sound business plan for its future are vital to secure funding.
You need to provide a large depositMost lenders will expect you to put up at least 25% funding as a deposit on industrial property.
You need to be certain you can make repaymentsBusiness property lending is secured on your property. If you don’t keep up repayments, you could lose it.
Our service is...
ImpartialTransparent and independent, treating all lenders equally, finding the best deals.
In-depthEvery type of finance for every type of business from the entire market - over 300 lenders.
In-personSpecialist Finance Experts support you every step of the way.
FreeWe make no charge of any kind when we help you find the loan you need.