The company already rented the premises, had no other borrowings and held £200,000 in cash available to go towards the purchase.
The property was somewhat unusual in that it provided commercial space much larger than they needed, plus it had separate residential accommodation. This gave the company many options in terms of letting out unwanted space and a possible re-development of the site at a future date, subject to planning consent.
Like many business owners, the directors did not have a close working relationship with their bank, particularly as they had no borrowings with them, and therefore no facilities that needed management.
We highlighted the strength of their business, due to their success and profitability, and approached a number of banks to obtain indicative terms. All of the banks showed a willingness to lend.
A £380,000 mortgage was put in place on a repayment basis over a 15-year term.
The arrangement fee was reduced from 1.5% to 1%, and the interest rate reduced from the standard 3.95% over base to 2.15% over base.
The bank’s security was a first charge over the property acquired, plus a debenture.
The directors were extremely pleased with the outcome, and are now the proud owners of their own business premises.