Yes, they do exist. Whilst the majority of mainstream lenders will insist on the loan amortising, this doesn’t suit everyone.
An Interest Only Commercial Mortgage allows higher leverage as the Debt Service Cover Ratio (DSCR) is met at higher levels, due to the cheaper loan servicing costs. For clients looking at transitional assets, short leases, or simply to maximise leverage and keep payments lower, then this could be the option for you.
We have the experience in dealing with the scenarios, like those below, that arise and that are most suited to Interest Only borrowing.
Multiple BTL Properties on one Freehold; most mainstream BTL lenders can’t assist for loans above £ 2m, or if there are more than 4x flats on one title.
Transitional Assets; where clients are looking to change the use of a property and / or obtain an uplift in value via planning gain
Short Leases / Multi-Tenant; an asset that has short term tenancies, where the chances of voids are higher than a traditional tenancy agreement
Developer Exit; where a client has some unsold units remaining after building out a site, and the Development Finance needs repaying