This was something that cropped up recently on a clients mortgage. I thought it would be useful to do a post on it as it will crop up from time to time.
I think the best way to start this is to take a look at the type of commercial property. That is where I think the biggest difference is with Mortgage lenders and their stance on whether they will or will not lend.
What is the commercial property close by?
Looking at lenders stance on properties close to commercial, it can vary wildly. Some have defined criteria on the types of commercial near by they will not accept and other lenders leave it down to the surveyor.
The general rule of thumb is that problems come in 3 forms:
- Smells,
- Sounds,
- Nuisance.
To give you an example, if the commercial property opposite is a Mortgage brokers for example, then as wild as we can be realistically we are unlikely to cause too much nuisance to the surrounding properties. We would like to think there will be no funky smells and we do not have loads of people coming and going at all hours. The noise is going to generally be to a minimum and only during reasonable working hours.
In this instance, all bar the strictest of lenders are likely to accept a property opposite us.
A personal favourite is a home opposite a pub and a take away. In my 20s, that would have been the dream. But from a mortgage lenders perspective there is likely to be litter and noise until late in the evening or possibly early hours of the morning. There will potentially be groups of people causing a nuisance and generally surveyors are not likely to be overly keen on it. Even country pubs can be a problem.
Likewise a mechanics, parking issues from the cars? Noise from machinery, what hours do they work? Will they be loud at the weekends?
Another “favourite” is an off license. We once had a flat above a Co-op in Manchester city centre. 2 lenders whose criteria states it is acceptable declined it. The third lender was fine with it. This is because you can often get groups of kids hanging around outside, litter, noise etc.
But there is always one that catches people out… Dry cleaners. This is because they are a fire risk. Not so much of an issue if you are on the other side of the road, but a flat above or next to is likely to be a problem.
How can we help?
We can rule out the lenders who will definitely say no based on the type of commercial property or the locality.
Some of the lenders we use offer the ability to send them a google street maps link beforehand to see if they would be comfortable with it. As great as this can be, only a small number of lenders offer this. It can help to reduce the pool of lenders quickly if nothing else.
Once we have a couple of options lined up, we can start to look at the products and who is cheapest, combined with who is most likely to accept and go from there.
In essence, we can help to narrow down the options quickly.
Summary
As with the example above, we may not always get it right first time. There is no exact science, a lot can depend on the surveyor. The last thing we want to be doing is 2-3 applications if we can avoid it.
However, I think one thing to mention before we get too far down the line is – If you are struggling to purchase the property because of issues near by, it means you may likely encounter problems when trying to sell it.