Borrowers and real estate owners are jubilant over this news. Since last year, there was little hope that things will change for them. As most of the borrowers were not in a position to pay back to the financial institutions and could not complete their building projects too. The land rates slashed down tremendously as a result land developers fell crashing down with no hope to proceed with their projects. Now, you can breathe a sigh of relief. Although UK banks are aware of the loss they may incur in future by taking such an initiative, they are ready to bear this. They know that if they default on a secured form of lending, then they can confiscate the land to get the pending dues from them.
For those who are not aware of the commercial mortgages:
Are you a new borrower who wants to buy or develop land for your business purpose? Understand that these business funds are variable in nature. The interest rate attached to such loans keeps varying and is on par with the England’s Base rate. This is not the same in case of a housing loan, this can be fixed or floating as per your choice!
On top of this base rate set by the Monetary Policy Committee, the lender will add his commission and set the over all rate. For example if the base rate is 3.5% on loans then the lender may add another 1.5% to this and will offer mortgages at 5%.