Commercial Property Finance and Asset-backed Funding

Commercial Finance that Meets Your Needs!

Mortgage Plus Commercial don’t only offer a broad range of home loans, our brokers also provide a full range of ainvestment property and commercial finance options and offer a truly professional service that puts your needs at the fore.

The most appropriate commercial property mortgage finance loans will take into account your individual circumstances and factors including the nature of your business, any other debts outstanding to your business, the financial standing of your business, why you need to borrow the loan and the businesses ability to make timely repayments.

We are located in Johannesburg and we are more than able to assist you through out South Africa.

We will discuss your needs with you, drawing out all necessary information, then present to you a range of financial solutions that meet your business needs, whether that is taking out a loan for a new commercial venture or to assist in expanding your business, to buy new property or premises, access the equity in your business to manage your debts and cash flow or any other of a range of business finance needs.

Some needs for a commercial mortgage can also be time sensitive, therefore, we work with you efficiently to gain loan approval or feedback quickly and meet all achievable deadlines. We also work to source the most practical interest and capital repayments that work in with your financial situation.

With access to hundreds of loans from leading bank and non bank lenders, your Mortgage consultant can assist you in finding the best finance solution for your business investment or commercial finance needs.

Option 1: Finance to invest in your own business property

Commercial and industrial property remains a secure investment for entrepreneurs – either to provide long-term premises for their own businesses or as high-return capital investments.

For the individual small or medium enterprise, renting premises may seem to offer greater flexibility than ownership. However, long-term tenancy may not be guaranteed and the investment made in improving rental premises may be lost if a lease cannot be renewed. Property ownership offers not only security of tenure, but also enables entrepreneurs to grow the overall equity of their businesses. Calculations show that, by purchasing a property or properties for own use, small and medium enterprises can save up to 50% on premises costs over a period of 10 years without compromising the business’s own cash resources.

For entrepreneurs seeking a property component for their investment portfolios, multi-tenant properties are a very attractive and viable option, as these can provide both capital appreciation and rental income.

Mortgage Plus Commercial division offers investment financing for a wide range of commercial and industrial premises and the expertise to match the needs of each individual business and/or entrepreneurial investor with the right property.

Mortgage Plus Commercial provides up to 100% finance to SMEs to buy their own business properties.

When considering to buy a property, think about the following:

• Is the business potentially able to generate sufficient cash flow to afford the regular repayments required?
• Is this the right property? ? consider location, facilities, size and condition
• Is the purchase price in line with the market value of the property?

-       Availability of finance for properties

Mortgage Plus Commercial caters for the needs of the entrepreneur with a viable business who wants to purchase his or her own premises, but who has limited capital or security to contribute or who does not want to compromise the business’s cash resources for the deposit. In most cases, financiers require a cash deposit before considering financing a deal. The deposit amount depends on the risk appetite of the financier and deposits up to 50% may be asked for. However, this could be lower given the economic condition, the price and the profile of the entrepreneur.

Mortgage Plus Commercial allows the entrepreneur a choice of different financing options and can structure the deal by advancing up to 100% of the financing required.

-       Financing criteria

• The operating business must be proven to be viable, able to afford the property and must have been in business for at least two to three years
• The property will be evaluated in terms of location, price, purpose build, facilities, size and condition
• The maximum repayment period for any property investment is ten years

Mortgage Plus Commercial will not only evaluate the property, but will also focus on the operating business. This means evaluating affordability, profitability, record of accomplishment, and the entrepreneurs behind the business.

-       Structuring the deal

The deal, however, must be seen in context of the risk to be understood to be fair. If Mortgage Plus Commercial finance the full amount, the company does take some risk. This risk is hedged by a cash deposit where such a deposit is paid, as is the case with commercial financiers. Therefore, Mortgage Plus Commercial needs to be rewarded for the risk taken. This means that the finance will be offered at prime rate (plus or less some percentage, depending on the deal) for a period of up to ten years, but will also request incentives for taking the risk.

Mortgage Plus Commercial, shares in the appreciated value of the property over a period of time. The result of this transaction for the entrepreneur is the following:

• The entrepreneur secures the property and obtains an asset that may appreciate over a period of time
• The instalment will probably be in excess of the rental payable in the short term, but the entrepreneur has no rent escalation concerns afterwards
• The entrepreneur can upgrade the property thereby increasing the value
• There are long term cash flow advantages

Option 2: Joint Venture Options

Mortgage Plus Commercial, co-invests in multi tenanted property projects. This arrangement is applicable where the investor is not able to or not keen to invest the full deposit (equity) required by a commercial lending institution. Here Mortgage Plus Commercial will consider co-investing and offer other property related services. The criteria and financing arrangements can be summarised as follows:

• The investor identify a multi tenanted property and do basic due diligence
• Mortgage Plus Commercial investigates the proposal and do a detailed due diligence as co-investor
• Both new developments and existing properties will be considered
• A commercial lender will be invited to offer first bond finance. The balance needs to be contributed by the investors. The shareholding depends on the contribution towards the equity portion. (If the equity required is R4 million, then R2 million contribution provides 50% shareholding.)
• Mortgage Plus Commercial manages the process (oversees the building process, legal implementation, and provides property management services, which include placement of tenants, maintenance, property administration and financial management.)
• The investor can be a passive investor or may play an active role during this process
• Regular shareholders meetings are held
• The parties may decide when to expand or sell the property in question
• Typical projects are suburban or regional shopping centres, industrial parks and in some instances office units

Option 3: Asset-backed funding

Mortgage Plus Commercial fills a void in the market for clients who require funding for working capital, need to reduce their bank exposure or need to meet other short term requirements. This product has been designed to meet the requirements of clients who are asset-rich but in need of short-term liquidity. Mortgage Plus Commercial does not lend against vacant land, but rather against residential, office, industrial and retail properties.

Minimum Requirements:

The borrower must be a juristic person in terms of the National Credit Act

• Maximum transaction value not to exceed 60% of valuation
• Valuation of property to be done at client’s expense
• Minimum advance of R 1 500 000 (no maximum)
• A first bond is to be registered over the property
• Maximum loan term of 12 months

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

How a pre-approved mortgage can help you

Whether you’re planning the purchase of your first or fourteenth home, it pays to obtain a mortgage pre-qualification certificate (better known as a pre-approved mortgage) from the lender of your choice. Not only does this step provide peace of mind, it also helps your offer stand out from the pack in a multiple-bid situation.

A reality check

Your mortgage originator will examine your current financial situation to determine how much you can afford to borrow, and give you a realistic idea of what your monthly payments would be. Some people avoid pre-approvals because they feel they know how much house they can afford – or that the money fairy will suddenly appear when they find the property of their dreams. Not having a pre-approved Mortgage or Home Loan often leads to unsuccessful bids due to financing falling through, leaving both the buyer and seller in an extremely disappointing situation.

In other cases buyers become “house rich and cash poor” because most of their income is spent on housing. It’s worth it to take the time, which can be less than an hour or two, to start off on solid financial ground.

With a pre-approved mortgage and or home loans, you have an amount to have in mind while house hunting. Instead of scrambling to see every open house in the neighbourhood, you can focus your search to homes that fit into your predetermined price range and by comparing similarly priced homes, you’ll be better able to gauge the value of each property and find the one that’s right for you.

Whether you decide to use a mortgage consultant, who will negotiate on your behalf to compare rates and terms from several financial institutions, or your preferred bank, the process of getting pre-approved is fairly straightforward. You’ll be asked to provide your financial information, including all assets, liabilities and proof of income as well as the amount you have available for a down payment.

After reviewing your financial situation, the lender will determine the maximum mortgage amount you qualify for and lock in a mortgage interest rate. Pre qualification certificates normally last for 90-120 days. If you don’t buy a home within this timeframe, you may renew your agreement at the going interest rate when your guaranteed rate expires.

A firm offer

Home buyers with a pre-approved mortgage have the upper hand when they put an offer on the table. And it’s easy to see why. Having pre-approval demonstrates that you’re serious about purchasing a home—you’ve done your homework and have arrived prepared. It also officially addresses your ability to finance the purchase, which leaves no question in a seller’s mind that yours is a firm offer.

It’s great leverage in negotiation or if you find yourself in a bidding war – and because you know your limit, you won’t place a bid that goes beyond what you can afford.

After your offer is accepted, all that’s left for you to do is to send in the property and offer details, along with any other information requested, to your lender and your pre-approved mortgage will be converted into your actual mortgage in a matter of hours.

When it comes to buying a home, there’s no better way to approach a purchase than with the confidence and convenience a pre-approved mortgage provides.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za