Commercial Mortgage Fees and Costs
A commercial mortgage agreement will typically consist of a number of different fees and associated costs. Naturally, the level of these fees will vary depending on your lender and the repayment options you choose. However the type of fees and costs associated with a commercial mortgage remain much the same, as outlined below:
- Interest rate – the margin or premium charged by a lender on the principal sum. Read more about the different types of commercial mortgage interest rates and the options available to you
- Arrangement fees – now charged by most UK commercial mortgage lenders and typically levied between 0.5% and 1.5% of the loan amount. This is often negotiable, particularly when using a commercial mortgage broker with significant ‘buying power’ such as ourselves
- Valuation fee – charged by the lender for completing a valuation and possibly full survey of the business premises you wish to purchase. These can vary significantly between lenders, so watch out for excessively high fees
- Legal / professional fees – typically a lender will cover their own legal fees, however, you will need to cover your costs associated with completing a commercial mortgage agreement, for example preparation and submission of legal documents or purchase of necessary commercial insurance
- Early redemption fees – the term for most commercial mortgage agreements ranges between 10 and 20 years. Should you wish to pay your mortgage off within this period, bear in mind you may have to pay an early redemption fee or penalty. Typically these do not apply after the initial 3 to 5 years of an agreement.
