Specialist mortgage lender Base Commercial Mortgages Limited, says 2008 could be the year in which specialist commercial mortgage brokers come to the fore, as increasing numbers of businesses seek professional help in response to more onerous lending terms being offered by traditional banks.
Paul Marland, sales & marketing director at Base Commercial, said: "Continuing uncertainly in the credit markets has resulted in many traditional banks tightening lending criteria and reducing lending volumes. This is causing business owners real problems and they are increasingly turning to professional commercial mortgage brokers for help.
"There are some excellent commercial products available and experienced brokers will be able to help borrowers agree competitive terms with a suitable lender."
However, Marland warns about the potential dangers of residential mortgage brokers diversifying into commercial lending: "An increasing number of residential mortgage brokers are looking to extend their service offering to include commercial mortgages, as the housing and mortgage markets continue to slow down.
"Commercial lending is, however, a very different discipline to residential lending and has plenty of potential pitfalls for brokers who are not familiar with handling applications from businesses as opposed to individuals. There are a far wider range of issues to be taken into consideration including more complex valuations and the status of the business making the application. My recommendation is for residential brokers to consider forming business alliances with professional commercial brokers in their area, to enable them to offer the best possible service to their clients."
Interbay agrees that there are opportunities to be had, as reported by Dan Raywood in our sister publication Mortgage Introducer. The provider has encouraged brokers to overlook the common reservations that surround the area, claiming that brokers typically avoid specialist commercial lending because they fear it is too complex, and are concerned they will spend time on the deal but it will fall through and they will not get paid.
Philip Hargreaves, Northern Regional Manager at Interbay, said there were opportunities in self-cert and sub-prime commercial deals, as well as prime.
Hargreaves said: "Specialist commercial deals are a fantastic opportunity to get a mixture of residential and commercial clients. There is great income potential - one or two deals a month can equate to £4,000 to £8,000. Moving forward more residential brokers will move into the commercial marketplace so get in there first while there is still opportunity."
Jonathan Barnett, of All Mortgage Matters, said: "I do get clients in but I will outsource to a specialist broker as it can involve incredibly long winded affairs and it is far better to put it into the hands of experts. It is a fairly specialist area and you need to be trained into it for the principles and criteria."
Danny Lovey, sole trader at The Mortgage Practitioner, said: "I'd like to think that I could do more, but as a sole trade I can't do everything. I'm always on the lookout for new opportunities for business but the problem I have found is that commercial lenders are slow in getting offers to you. What you want is someone who will get an offer to you, but what I will say to clients is have you spoken to your bank yet? If you are a bank customer you have a good chance of getting a deal."
