We can help

At Church Mortgages Direct we talk your language. We have experts who will guide you through church and charity rules and regulations. You are unlikely to find this level of expertise in the High Street Banks. Click below for a brief outline of some of the key issues.

Where can we find a suitable mortgage?

How much deposit will we need?

Property valuation

Local Authority planning issues

Special permissions

Collateral security

Limited commitment

Repayments

Your mission

Fundraising

Who can apply

Where can we find a suitable mortgage?

Most of the mortgages advertised on the High Street are for personal applicants borrowing money to buy their own home. Many banks and building societies will not even consider commercial premises. The main lenders are the big High Street banks, but the reaction you will get when a Church or Charity approaches them will vary considerably. They are more accustomed to dealing with profit-making businesses than people with a vision and mission.

How much deposit will we need?

Churches and commercial properties tend to be more difficult to sell than a house. When the economy becomes less certain, it can be very difficult to find a buyer at all. Consequently the typical deposit required is 30% of the value of the building to give more security to the bank. At Church Mortgages Direct we have a different approach. For smaller properties we require only a 10% deposit, rising on a sliding scale to 30% on more expensive properties when we expect that you will perhaps be selling an existing building to provide the larger deposit. If the Church or Charity owns other properties these may be used as additional collateral so you may even be able to borrow 100% of your project amount. At Church Mortgages Direct our aim is to turn your vision into reality.

Property valuation

Valuing a commercial property is much more difficult
than estimating the value of a house because the building is often unique and therefore a specialist valuer is required. If you are buying a building, we would recommend that you do not make a bid without first seeking guidance from a specialist to ensure you do not pay too much. When the time comes to obtain a valuation for the Bank, we have a panel of qualified firms who specialise in dealing with various types of property and will guide you through the process. If you are planning an extension or redeveloping an existing building, we will probably also need to have the property valued. In these cases it is important to ensure the valuer can accurately forecast what the finished building will look like so that we can lend you money against its future value.

Local Authority planning issues

All commercial property has a specific planning use attached to it. For Church and Community use this will normally need to be D2 or D1. If required, your Local Authority must be approached for permission for change of use and in some areas this will be harder to achieve than in others. As a Charity, you will need to ensure that you have correct permission for use before committing the money to purchase. We understand the difficulties in certain parts of the country, and will do our best to help you.

Special permissions

If you are planning an extension or redevelopment you may also need to obtain planning permission and in some cases a Faculty from your denomination or listed building consent.

Collateral security

In order to protect the mortgages that banks make, they require a legal charge on land or buildings. Usually this will be a first mortgage on the property being purchased or developed. We recognise that it is sometimes simpler to borrow against the value of another property, but this must be owned by the same organisation that is borrowing the money. Many Churches are held in trust, perhaps by the denomination or another trust company. We are familiar with these schemes and can guide you through the necessary arrangements. Sometimes the property may be on a long leasehold or there may be an existing first mortgage, but we can help you to deal with these issues.

Limited commitment

Many banks demand that the Trustees or Directors provide a personal guarantee as well as offering the property as security. At Church Mortgages Direct we understand that you are giving your time and skills voluntarily and do not ask you to make any greater commitment than ensuring that you act responsibly and use the organisation’s money and assets to repay the mortgage.

Repayments

Unlike a business we do not expect to look at your Annual Accounts and find big profits which are enough to repay the mortgage. We do, however, need to satisfy ourselves that you will be able to make the payments each month. When assessing this, we will start with your track record over the last three years and calculate the average surplus of income over expenditure. We then look at what savings you might make when you own the property, such as on rent. After this it will be up to you to explain what extra income you might expect, which might include lettings from the premises, activities that you will start or pledged extra regular giving by members. We are very experienced at what is successful and can often make suggestions of how to prepare your vision document or business plan.

Your mission

Gaining an understanding of your organisation, your vision and mission is as much a part of our decision process as assessing your ability to meet the repayments. We will want to meet with at least some of your leaders and pray together. We are interested in what you are doing now and what you intend to do once you have completed the building project. We are interested in seeing lives changed and we are excited to receive feedback once the project is completed.

Fundraising

When embarking on a building project there is nearly always a need to raise money. We have gained a wealth of practical experience of working with Churches and Charities and are happy to share this with you. We recognise that sometimes you need to get agreement for a mortgage before you have collected the donations and we can work carefully with you to achieve this.

Who can apply

Mortgages provided by Church Mortgages Direct are designed to meet the specific needs of Churches and wider Charities that have grown out of the Church.
To ensure that an organisation is well run we expect you to be a Registered Charity and to have been operating for at least three years. We recognise that sometimes it is better for a project to be owned and run privately or by a small group of people. As long as the main purpose is to provide some form of social action then you can also apply for a mortgage with us.

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