Commercial Mortgages for Property Developers

The typical case here is a developer who has finished a scheme, sold some units, and wants to hold the remainder as investment stock rather than fire-selling to clear the bridging lender. A commercial mortgage is how you execute that. You refinance the bridging debt, often at a rate a couple of percentage points cheaper, and the rental income from the retained units services the new debt while your equity stays in the asset.

The lender who says yes to this is usually a challenger bank or specialist property lender, not your high-street bank. High-street lenders struggle with SPVs, non-standard builds, or anything that was originally a development site. Challengers lend into SPVs as standard and assess the asset on its investment merit, not just whether your trading history fits a template.

DSCR is the number that decides it. Lenders want gross rental income to cover the mortgage payment by at least 125%, often 145% at stress rates. If the yield is thin relative to the loan, the numbers will not stack regardless of your track record. We run that calculation before we approach anyone, so nobody's time gets wasted on a deal that was never going to fund.

Portfolio facilities are worth knowing about. Once you hold three or more investment properties, some lenders will consolidate them under a single facility rather than individual mortgages on each. That simplifies management and can improve overall pricing, though it does put all your properties under one lender's roof, which carries its own implications if you ever want to sell or refinance one unit in isolation.

We are a broker, so we do not set the rate. The lender decides that on the asset, the tenancy, the loan-to-value (the ratio of the loan to the property's current value), and the DSCR. What we do is place the deal with the lender most likely to back it on terms that actually work for you.