The majority of people in the UK when searching for a personal mortgage for their home would use a mortgage broker to find the best deal. However, we still find that many clients approach their own Bank when looking for Commercial Mortgages without researching the options available. Their assumption is that their own Bank will offer them the best terms. In reality, lenders have different criteria, different preferred sectors and their cost of funds is not always equal. I thought that a short illustration of a very small Commercial Mortgage such as the one we have looked at this week illustrates the difference in how much using a broker can actually save over the course of the term of the facility. I have removed all of the lenders names but these are all high street Banks who were asked to provide an identical quote on a Commercial Mortgage of £105,000 over a term of 15 years. For this particular case the quotes are summarised below and I have calculated the difference assuming the rate remained the same throughout the term.
As you can see there are large differences in the amount the lenders could advance, their fees and their rates.
If we compare Bank 3 with Bank 5 given they offered the same loan amount, over a 15 year term the difference in cost to this client is £14,962.50
Their main Bankers were Bank number 3 so this is what they would have been offered if they did not look around.
This was only a small facility- the majority of Commercial Mortgages are much higher than this so the effect is greatly magnified.
If we can assist with any Commercial Mortgage enquiry for you or your clients please get in touch.