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Using Commercial Finance

Stephen Johnson, managing director at Shawbrook Bank outlines to the editor Richard Bowser why commercial finance can be a very useful resource for property investor-landlords who are looking to expand their portfolio by adding value to properties

Banks just do not want to lend, especially to experienced portfolio  landlords', has been an oft heard from attendees comment at property events in recent years. Well if you are one of those who bought too aggressively at inflated prices back in the boom years of 2005-8 and still have a portfolio in negative equity then you may well be struggling to get new finance offers, particularly if your rental yields are modest. But if you do have a more solidly based rental property business, just what alternatives might be available, apart from short-term bridging finance.

My first questions to Shawbrook's Stephen Johnson was how does commercial property financing differ from mainstream or 'vanilla' BTL lending and what are the pros and cons that investors need to consider if they feel that their existing property funding routes are not always appropriate, especially for the more complex projects?

"Mainstream buy-to-let financing covers exactly that - straightforward residential buy-to-let opportunities," he replies. "However, there are a range of property investment opportunities which do not meet the strict 'vanilla' buy-to-let criteria. Houses of Multiple Occupancy (HMOs) fall into this category, as do portfolios, commercial and semi-commercial properties. Here, it's necessary to analyse the investor's business model more closely to determine the value of the investment. Commercial property financing is therefore a more flexible type of finance as it will fit round your individual situation rather than being one-size-fits-all."

So why should investors consider this type of finance?

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