FAQs

Frequently Asked Questions

What is the difference between a Broker and a Lender?

As Brokers we aim to source solutions for your requirements from our pool of Lenders including Challenger Banks, High Street Banks, and alternative funding institutions. Brokers do not normally lend money themselves.

What role do you play as the Broker?

We manage your application from initial enquiry to completion. We will liaise with Lender(s) on your behalf and other relevant professionals to ensure matters go smoothly, always keeping you advised of progress.

Do you charge upfront fees?

Sterling Commercial Finance does not charge upfront fees, although beware as some brokers do. Always use a Broker who is FCA registered and a member of the NACFB (National Association of Commercial Finance Brokers)

What are the fees?

Our Fees – often, but not always, the Lender will pay part of its arrangement fee to us as a commission and in many instances, it will not be necessary for us to make an additional charge.

You will always be informed of our fees before making any commitment.

Our fees are only payable if the business finance is drawn.

Arrangement fees – these vary according to Lender but often fall in the region of 2-6%.

Third-party fees – such as valuation or legal fees and costs/expenses are payable by the borrower.

Will you help me with the form filling and other paperwork?

Yes, we will. We will assist you in completing the application form and provide you with a list of other documents that the lender requires. We will then collate all the paperwork, check it, and then package the information before submitting it to the lender with our summary report.

What are the interest rates?

Interest rates largely depend on the Lenders perceived view of the level of risk in a transaction. Risk can be mitigated by features such as security, experience, the reserves of the business, sector, customer base etc. A secured loan to a sound established business could very likely be sourced from a high street Bank at a very attractive rate whereas a loan to a start-up business where there is a modest  contribution from the owners and little or no security will be more expensive.

We will usually be able to advise at an early stage what sort of interest rates will be payable in a given scenario.

Interest rates are also dependent on the source of capital, some lenders can quote rates linked to Bank of England base rate. However, in the Alternative Finance market rates are usually fixed for the term of the loan and depend on the cost of capital to the Lender.

How long does the process take?

It varies from deal to deal , we have completed straightforward unsecured loans in seven days but for a secured loan we would say allow 6 weeks from picking up the phone to us to receiving funds.

Some transaction by their nature e.g. acquisition MBO’s/MBI’s take longer but we will be able to advise on the likely timescales once we understand what is required.

The timescale will be accelerated if the information we need is immediately to hand, there are no other lenders involved, and/or the transaction is relatively simple. Conversely it will take longer if taking security behind existing lenders and where security priorities must be formally agreed/documented, or where asset valuations are required and where land forms part of the security.

What are the redemption fees?

Many loans can be repaid early without penalty and some Lenders will permit one off lump sums repayments without penalty. However, some Lenders make a charge for early repayment (redemption fees), if applicable this will be included in the Lenders terms.

What types of businesses can we assist?

We are seeking established businesses that can demonstrate an ability to repay the loan and where appropriate provide adequate security.

How much can we borrow and over what period?

Loans range from £50k to £10m, repayable usually over periods from 6 months to 5 years.
Interest only loans can be arranged, but we need to be sure where the repayment is going to come from.

How Confidential is our information?

Sterling Capital Reserve Ltd will treat all information provided by you as confidential. As the Client you will have control of what information is disclosed. Borrowers keep all information we provide them confidential unless you expressly agree that it should be shared.

Is Sterling Commercial Finance Regulated?

We are regulated by the Financial Services Authority (FCA), under reference no 733615. We are also members of the National Association of Commercial Finance Brokers (NACFB) and adhere to their recognised Code of Practice.

Does it matter where the business is based?

Generally, the business must be based in the UK.  If you are looking for Property Finance, then the property must be based in the UK.

From our perspective we can fund businesses or property finance anywhere in the UK, but common sense and our own geography dictate that we will generally fund deals where we can provide a full service for our client, which as a rule of thumb is usually a maximum of a two hour drive.

Do you look to sell other products such as Life Cover?

Our focus it to source funding for our Clients. Occasionally Lenders will make Life Cover a condition of the loan and we may ourselves, where appropriate, suggest that Life or Critical Illness cover should be considered. We do not sell/arrange these products for our Clients.

Why should I choose a broker and why Sterling Commercial Finance?

Choosing a Broker to source your property funding, takes away the hassle of searching the Market yourself to find the right deal that meets your needs.  As Brokers we spend a considerable amount of time keeping up to date with what the market has to offer and therefore Clients benefit from this but with a single point of contact.

Sterling Commercial Finance is a professional property finance brokerage and we have been helping our Property Clients for over 20 years

We pride ourselves on:

  • Our service
  • Our expertise
  • Our contacts (including solicitors and valuers)
  • Our advice
  • Our ability to put a financial package together that gets you a very competitive deal

Do you charge a Broker fee?

Yes. However usually the Commission paid by the Lenders is sufficient to cover our time and expenses.  If we do charge a Broker Fee, this is only payable if the property finance is drawn. We would agree our fee with you in advance and this will be shown on any written illustration provided.

How much can I borrow as a percentage of my property value?

Current loan-to-value ratio is up to 75%, but this will depend upon other factors including the industry sector, your experience, credit history, ability to service the mortgage plus the quality and type of the property.

How much can I borrow?

If the property has a business with it and is being acquired on a going concern basis, the purchase price will include fixtures & fittings and goodwill. We can obtain up to 65% of the purchase price, or valuation whichever is the lower, depending on the industry sector.

If borrowing is restricted to the property value alone, we can obtain up to 75% of the valuation, again depending on the type of property and industry sector.
This can increase to up to 100% with additional security. All subject to serviceability.

What are the interest rates?

This largely depends on the quality of the property, the experience of the applicant, loan to value and the strength of the accounts. We can provide a written illustration on request.

What are the minimum and the maximum amounts that I can borrow against a property purchase brokered through yourselves?

Minimum: £75,000.
Maximum: £10,000,000

How long can I have to pay the Property Mortgage back?

Minimum term: 2 Years.
Maximum term: 30 Years.

What’s the minimum property value that will be considered?

The minimum value is £75,000.

I am self-employed; can you look at sourcing a Property Mortgage for me?

Yes.  Lenders are able to advance monies to self-employed people who are sole traders or part of a partnership or a director of a limited company. They will need to see tax returns and accounts to confirm income.

What security is required for a Property Mortgage?

A Lender will require a legal charge over an acceptable property.  When the Applicant is a Limited Company then will also require a Debenture, plus personal guarantees from the Directors

Will I need a deposit to obtain a Property Mortgage?

Yes. A lender will look at lending up to 75% with no additional security, depending on the type of property and industry sector. However, if you are able to provide additional security i.e. your home or an investment property, then they could arrange a loan up to 100% of the value.

REMEMBER ANY PROPERTY USED AS SECURITY, INCLUDING YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBTS SECURED ON IT.

What security is required for a Property Mortgage?

A Lender will require a legal charge over an acceptable property.  When the Applicant is a Limited Company then will also require a Debenture, plus personal guarantees from the Directors

Can you help with a deposit?

The maximum loan we can achieve is usually up to 75%, depending on the type of property and the industry sector and you need to contribute 25% plus costs. These costs will be the Lender Arrangement Fee, Stamp Duty Land Tax ( if purchasing a property), Legal Costs and the cost of the valuation plus a Broker Fee, if applicable. If you can provide additional security, then 100% may be achievable. See question above.

What can I use the money for?

Subject to the purpose being legal, the money you borrow can be used for any business purpose. As well as the usual purchase and refinance purposes, you may wish to carry out repairs and alterations to the property. Other alternatives would be to inject longer term working capital into your business or restructure other business debt you have onto more favourable terms.

I am not sure what type of finance I need. Can you assist me with this?

Yes. We will talk your circumstances through with you and ascertain your long-term goals. We will then suggest a funding package that suits your requirements.

Can I get a Property Mortgage on my Commercial Property to consolidate my debts?

Yes.  If you own your commercial property and wish to arrange a commercial re-mortgage to consolidate your business debts, then we can look at this option as long as the additional funds are required for a legal and business purpose.  Normally you would not be able to refinance personal debts such as Credit Cards and Personal Loans.

What types of businesses can we assist?

We are seeking established property businesses that can demonstrate the ability to repay the property mortgage.

How long does it take to complete a Property Mortgage?

Typically the time scale is 6 – 8 weeks to include submitting the application, the offer being issued, the valuation being done and the respective solicitors completing their work.

Pleased be assured that we will endeavour to complete your property mortgage application as quickly as possible and will keep you fully updated from the start, all the way through to when your property mortgage funds are released.

Are fixed rate Property Mortgages available?

Yes, fixed rates are available. Please ask us for full details and a written illustration.

Can you secure funding for First Time Landlords?

We typically only deal with experienced property landlords with a Portfolio.  However, there are Lenders that can assist if you have a minimum income of £25,000 pa that is separate to the Rental income.  We cannot assist if you have previously lived in the property put forward as your main residence, but otherwise please contact us for an illustration.

What do I do next?

Call us, email us, or submit an online enquiry request.
One of our experienced consultants will then contact you and discuss your requirements in more detail.

Is there a cost to repay the Mortgage early?

Property Mortgages usually have an early repayment charge clause in their terms.  The actual percentage amount varies from Lender to Lender.  We will discuss this with you at the outset and any early repayment charges will be quoted in our written illustration.

What costs are involved?

  • Valuation fees vary between £250 and £2,000 (plus vat). The size of fee depends on the type and value of the property and its location.  Residential Investment valuation fees tend to be lower than a Commercial Property valuation.
  • Bank arrangement fee will be between 1% and 2% of the mortgage. Often this can be added to the mortgage on completion
  • Land registry fees and disbursements in the region of £400.  Speak with your Solicitor.
  • Legal fees (these will vary from firm to firm)
  • Stamp duty land tax (SDLT) will be payable on purchases. Please check with your solicitor
  • Broker Fees – Typically 1% but not payable until deal completes.

Are Interest Only Property Mortgages available?

Yes. Please ask for full details and a written illustration.

Buy to Let Mortgage

What is a buy to let mortgage?

A Buy to let mortgage is a mortgage for purchasing residential property with the specific aim of letting it out to tenants.

What is an HMO?

An HMO (House in Multiple Occupation) is a house where multiple, unrelated tenants have exclusive access to their rooms and share common living areas, such as a kitchen or bathroom. The property can either be let on one AST which includes all the tenants, or each tenant can have its own AST agreement. As of 2018 the formal definition is any property occupied by five or more people, forming two or more separate households. Legislation requires that some HMOs are licensed by the local authority, so it is important to check.

Can you secure funding for First Time Landlords?

We typically only deal with experienced property landlords with a Portfolio.  However, there are Lenders that can assist if you have a minimum income of £25,000 pa that is separate to the rental income.  Please contact us to talk through your circumstances.

I have found a property Id like to purchase but it needs work before it I can rent it out, can I get a buy to let mortgage?

No! Buy to let mortgages are only available on properties that are immediately habitable. If the property requires improvements before it can be let you may have to take out bridging or refurbishment finance first. Once the property is ready to let, you can then refinance onto a buy to let mortgage, but this can be costly so make sure you do your sums.  Please contact us to discuss.

Property Development Finance

What is Property Development Finance?

Property development finance is funding for either major new building projects or comprehensive renovations. Think new housing estates, luxury homes, office blocks converted to flats, etc. It works for residential, commercial and mixed-use property.

How much can I borrow?

Loans are based on a percentage of the gross development value. This is typically 65% to include a roll up of interest for the term of the loan.  The amount depends on the deal and we recommend that you contact us, so that we can look at your options.

Do I need experience for Development Finance?

Usually yes. Most lenders prefer property developers to be experienced but it is sometimes possible to get finance if you have no experience, particularly if you plan to employ a team of professionals to carry out the development for you.

Bridging and Short-Term Finance

What is a Bridging Loan?

It is a short term, interest only loan for funding property purchases. Bridging loans are usually available for between 1-12 months. Please contact us to discuss in more detail.

Is a Bridging Loan different from short-term finance?

No, a bridging loan is a type of short-term finance.  Property investors and developer’s take-out short-term finance to build or refurbish a property, before either selling it or refinancing it onto a BTL Mortgage.

What can I use a Bridging Loan for?

You can use a Bridging Loan to buy a property or raise equity against a property already owned for refurbishment or the purchase on another property.

What rates of interest might I be offered?

Rates vary depending on your circumstances, how much you want to borrow and the type of property.  Please contact us and we will provide you with a full illustration.

Can I repay a Bridging Loan early?

Yes.  However some Bridging Loan Lenders will charge an exit fee.  Please contact us and we will provide you with a full illustration.

Why should I choose a broker and why Sterling Commercial Finance?

After the financial crash of the 1990’s many of the mainstream Lenders reduced their appetite for business while they overcame various difficulties and repaired their balance sheets. During this period, the Alternative Finance market evolved, and numerous Lenders stepped in to meet the needs of business. There are 100’s of such lenders and brokers spend a considerable amount of time keeping up to date with what the market has to offer.  Brokers invest the time to keep abreast of the market so that business owners benefit from what the market has to offer but with a single point of contact.

Sterling Commercial Finance is a well-established and professional commercial finance brokerage.

We pride ourselves on:

  • Our service
  • Our expertise
  • Our contacts (including solicitors and valuers)
  • Our advice

Our ability to put a financial package together that gets you a very competitive deal

Secured Loans – what level of security is required?

Traditionally a bank would only regard a facility as secured if it held covering security (valued on a written down basis).  However, Lenders in the new Alternative Finance sector do not necessarily seek full security cover and may recognise assets as security that the banks would not.  Some Lenders do not seek formal security and rely on the Personal Guarantees of the directors.

Some Lenders are looking for tangible security typically in the form of security while others, when lending to Limited companies will seek a Mortgage Debenture to capture assets such as stock and debtors.

What constitutes security may include:

A Debenture over the business (Limited companies), whilst this is a standard requirement in some cases a debenture could encompass significant levels of security over business assets; in other cases, it may be worthless.

  • Charges over certain business’ assets by way of a chattels mortgage.
  • Charges over property held within the business (1st charges preferable)
  • Personal guarantees from the business’ principals possibly with additional supporting security e.g. such as charges on property.

The better secured propositions invariably receive greater interest from lenders and lower rates.

Secured Loans – at what point should I provide a valuation of my assets?

We would urge borrowers not to incur the cost of professional valuations before approaching us. In due course we would expect to agree an appropriate valuer with you and obtain a fee quote for their work. It is essential that the valuer is acceptable to the Lender and that a formal instruction is made by us or more likely the Lender.

Can loans be drawn in stages?

In most instances the Loan can be drawn in agreed stages. However some Lenders due to the way they operate raise the total fund for a project at the outset but release the monies in agreed stages., In case of the latter it follows however that interest is paid to lenders on the total agreed loan balance from the outset not just the amount drawn.

Can new starts be funded?

There is limited support available for new start business especially where there is little in the way of contribution or tangible security – but it always worth asking us.

If for any reason an established business is transferred to a new corporate entity, depending on the circumstances this can be acceptable.

We would usually define an established business as one which is profitable with two years accounts registered at Companies House.

I am an adviser and would like to discuss a client proposition

Please call or email us. We would be delighted to chat through (on a no names basis initially if that suits you at this stage). Approximately 50% of our deal flow comes from Accountants, Banks, or other financial advisors with ad-hoc deals.

We arrange finance through a diverse range of lenders from the High Street Banks and standalone specialised property finance lenders to Asset Based Lenders through to Peer to Peer Platforms and the specialised “boutique” Lenders found in Alternative Finance Sector. Each Lender works in a different way and has an appetite for transactions of a different type. We consider each proposal on its merits and approach the most suitable Lender(s).

The following information is generic and not specific to one Lender.