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FAQ Category: Borrowing questions

A compilation of our most common questions and answers. If you can’t find the answer you’re looking for please call us or email us through our contact form. We will be pleased to help you.

  • Is there a maximum loan amount?

    There is no maximum borrowing amount. However, the maximum that any business will be able to borrow will depend upon the circumstances of that business, the ability to meet the repayments and the security available.

  • How do I calculate my monthly repayments?

    For an estimate of monthly repayment costs, you can use our Ag Mortgage Calculator.

    Another method is to multiply the amount of £’000’s by £6.50 which will give you a good indication of the repayments over 25 years at say 6% interest e.g. £500,000 = 500 x £6.50 = £3,250 monthly repayments.

  • Can I calculate how much I can borrow based on my current salary?

    Unlike a residential mortgage where lenders use your salary or income as a basis for the amount you can borrow; commercial lending is different.

    Lenders will ask for a ‘shopping list’ of information to convince them of your ability to run the business and repay the mortgage. You can find more about this in our Business Plan Guide.

  • What is likely to be the rate of interest?

    Interest rates varydepending on each lender, their level of risk, the amount you wish to borrow and the quality of your lending proposal.

    Variable interest rates are calculated at a margin percentage over either the prevailing Bank of England Base Rate or the lenders own base rate. Margins currently range from around 2% (for strong cases) upwards.

  • I have a 10% deposit towards a purchase, is this sufficient?

    Not really, 30% of the purchase price is the minimum deposit you need, unless you have additional owned property (either yours or a willing third party’s) which could be used by the lender as security.

  • Can I borrow 100% of the purchase price of a property?

    Borrowing 100% of the purchase price of a property is a possibility. However, there are two caveats here. Firstly, you would need to offer additional property as security that is owned by yourself or a third party. This is because you still must comply with the 70% LTV rule. Secondly, the borrowing would be subject to the ability of your business to meet the repayments.

  • How much deposit do I need to buy the land or property?

    Lenders will require you to pay at least a 30% deposit.

    However, there could be ways around this if you can offer additional property as security. This would be property either owned by yourself or by a willing third party – such as a family member or business partner.

  • What is the maximum Loan to Value (LTV)?

    The maximum LTV typically is 70% of the security offered. So, using a simple example, if you want to borrow £700,000, the security value would have to be £1 million.

  • How much can I borrow to buy the land or property?

    Lenders will secure your mortgage against your new land or property. If you can’t repay the debt they can sell the land or property to recover their costs.

    Lenders will usually lend you up to 70% of the value of the security property. This is termed Loan to Value (LTV). So, if the land or property is worth £200,000 – a lender would lend you £140,000, and you would pay the other 30% (£60,000) as a deposit.