Where to go for a Commercial Mortgage when you have bad credit:
Is a bad credit record stopping you from purchasing a commercial property?
Or are you having trouble paying off your existing creditors and other business expenses?
If your credit file contains damaging information, do not despair. There are still commercial lenders offering commercial mortgages to businesses with bad credit.
Even if you no longer qualify for other business loans and products because of your poor credit history, there are lenders offering bad credit commercial mortgages to accommodate your needs.
A commercial mortgage is secured against commercial property, although it does not necessarily need to be only your business property if you have other properties they can also be used if appropriate.
Credit History and Commercial Loans
It is important to understand the difference between credit scoring and credit checking. If you apply to the wrong type of lender they will credit score your application and may automatically reject you.
By working with a commercial finance broker you can be sure that your case will be heard sympathetically and avoid the automated systems. This means that if you apply for a bad credit commercial mortgage you will not be rejected automatically because of some unpaid bills or County Court Judgments (CCJs).
In all cases you will be asked to explain the circumstances and volunteer the information about your credit history. When considering a bad credit commercial mortgage application lenders prefer to find out about a credit problem directly from the applicant rather than as a result of carrying out credit checks.
Applying for a commercial mortgage with bad credit
Technically, it is quite easy to get a bad credit commercial mortgage. However, since you are considered a poor credit risk because of your bad credit history, the interest rates of these bad credit commercial mortgages can be much higher than regular commercial mortgages. Another unavoidable feature of impaired credit commercial mortgages are the Early Repayment Charges (ERCs). This means that if you repay the commercial mortgage within the first 3 to 6 years you can expect to pay relatively higher charges.
Because there are now more lenders and brokers offering bad credit commercial mortgages there should be no need to pay excessively high broker fees. Be sure to check that any fees are reasonable and that you understand all the terms of the mortgage.
Bad Credit; is it time to stop digging?
If your credit situation is bad and getting worse, then you should seriously consider whether taking on more debt is the most appropriate action. Bad credit commercial mortgages are expensive compared to the high street banks, and if you do not want to end up being buried in mounting debt you should make absolutely sure that you can afford the repayments.
However, if your situation is improving, or if the circumstances leading to the bad credit being registered were exceptional, then a bad credit commercial mortgage can be a life saver. Your credit history should not stop you or your business growing. A commercial mortgage can be a very effective tool in injecting more cash into your business.