Commercial Mortgages - How Best to Secure Finance

Commercial Mortgages - How Best to Secure Finance

As the banks around the world currently have the pick of the best real estate deals they wish to fund I thought I'd devote this article to helping you put yourself in the best position to secure the funding you may require for your development or project.

We are increasingly approached by developers desperate for funding. However what is surprising is how many of them have done very little preparation in preparing their request. Even when the banks were lending freely you still needed to have a comprehensive business plan put together and that requirement is even more acute in the current climate.

So where do you start when approaching a funder for money?

The first thing the funder will want to look at is a business plan. If you don't have one then there's no point asking if your project can be financed. Also you may wish to consider having it translated into the language of the country the project is based. This will make it easier for any local banks to consider.

The business plan should provide a detailed description of the business, what the business does or is proposing to do, years in business, view of current financial condition of company and who or what caused the company to be in its current position.

The request for funding should show the name of the company applying for funding and who the company owners are and their percentage of ownership.

How much funding do you need? Don't be scared to ask for what you need as asking for too little can be counterproductive. What will the funds be utilized for? The lender is going to be looking at something they can secure a legal charge over ie land or property. They will also want to know how long you have been seeking funding and who you have approached and why they turned you down. Just because a previous lender turned you down doesn't mean that it will jeopardize any new request.

What type of funding are you looking for and why? Do you prefer to offer equity in the project or would you prefer the debt to be secured against the asset. How long will you need the funds for? Lenders will be looking to see that you have a well planned exit route so that they can get their money back. This might be in the way of presales or deposits already received.

Lenders also ask how much you are investing into the project. This is known as hurt money. If you have a great idea but expect someone else to take all the risk without putting any money in then its unlikely your project will be funded. The lenders typically want to know how much of your own money is at risk with the project and how it has been spent so far. They will want you to briefly outline your plans to repay the loan should the business fail.

They will also want to know what experience you have in what you are trying to achieve and the experience of your management team so a CV is usually a must.

Once you have collated all that information along with your detailed financial documents then its time to submit it to a broker who will then be able to look over everything before submitting it to their lenders or private funder contacts.

A word of warning at this stage. We have heard of a number of developers desperate for money for their project parting with large sums of money on broker and application fees. Then unfortunately the promised funds never materialize.

How Overseas Mortgage Broker operate is that we get the developer to complete a funding application in the first instance. Once we have looked over this if all the required supporting documents are available then we would submit it to the lender or funder for their initial comments and to see whether they are interested in helping fund the project. If you haven't bothered to put together a plan or can't be bothered to answer the questions then that acts as a filter and ensures that only well thought out projects get put in front of our contacts

If the funder is happy to offer terms then only at that point would due diligence fees start to be incurred for things like valuations and maybe site visits. There may also at this point be a small broker fee as a sign of good faith. It's highly unlikely you will get a funder providing you with a loan without any upfront costs however a good broker should be able to help you make your project presentable to a lender without hitting you for large fees for doing so.

I hope that gives you an insight into how to present your project and we look forward to hearing from you if you have any requirements.


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Author: Regular Articles

Overseas Mortgage Broker is one of the UK's leading brokerage for personal and commercial overseas mortgages and finance. To find out more visits us at and for further information on our commercial mortgage department in particular, visit

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