£1,312,500 Commercial Mortgage With VAT Loan Completed in 5 Weeks
Contracts had already exchanged on a shell-condition warehouse in Ilford, and the purchase could not complete on the mortgage alone — the VAT bill had to be funded on the same day. A2Z arranged a £1,312,500 commercial mortgage with a VAT loan running alongside it at 75% LTV against a £1,750,000 valuation, and closed both facilities together with the completion deadline days away.
Deal Snapshot
The Client Scenario
The client was a property investor buying through a special purpose vehicle — a limited company set up to hold the asset. The purchase was a commercial warehouse in Ilford, valued at £1,750,000, and the plan was straightforward on paper: acquire the unit on a five-year commercial mortgage and hold it as an investment.
The property itself was the first complication. It was being sold in shell condition — no fit-out, no occupier, and no finalised Energy Performance Certificate. Lenders read a shell unit as an asset that produces no income on day one and cannot legally be let until its EPC is in place, which narrows the list of funders willing to look at it as security at all, let alone at 75% LTV.
The second complication was the one that actually threatened the deal. The sale was subject to VAT, and the client did not have the VAT element sitting in cash alongside the deposit. A commercial mortgage funds a percentage of the purchase price — it does not fund the VAT. Without a separate facility to cover that bill on the day, there was no completion, regardless of how well the mortgage itself was structured.
And by the time the case reached A2Z, the client had already exchanged contracts. The completion date was fixed, the deposit was committed and non-refundable, and a notice to complete was the realistic consequence of missing the date. There was no version of this deal where the finance arrived late and the client simply waited.
What Could Have Gone Wrong
Two facilities from two different sources had to land on the same day, against a completion date that had already been set by an exchanged contract. If either one slipped — the mortgage or the VAT loan — the client did not get a partial outcome. They got a failed completion.
That is the specific pressure in a post-exchange purchase. Before exchange, a finance delay is an inconvenience. After exchange, it is a breach: the seller can serve notice to complete, and if the client still cannot perform, the deposit is at risk and the contract can be rescinded. On a £1,750,000 purchase, the exposure was not the arrangement fee — it was the deposit and the asset.
How A2Z Structured the Commercial Mortgage and VAT Loan
A2Z treated this as one funding package rather than two applications. The mortgage and the VAT loan were placed and progressed in parallel from day one, on the basis that a mortgage offer without VAT funding is worth nothing on completion day — and the reverse is equally true.
That meant selecting a lender who would take a shell-condition commercial unit at 75% LTV on draft EPCs rather than final certificates, then holding both facilities to the same completion date so the money was in place together. The result was a five-year term facility at 7.42% fixed, drawn alongside an unsecured VAT loan, with the purchase completing inside the exchanged deadline.
Buying a commercial property with VAT on the price?
Shell condition, SPV purchase, or already exchanged with a completion date running — we structure the mortgage and the VAT loan together, from day one.
A2Z Bridging Ltd is authorised and regulated by the Financial Conduct Authority · FRN 808769
The Outcome
Have you exchanged, with the finance still not tied down?
A commercial purchase with VAT on top needs two facilities that land on the same day. We structure them together and hold both to your completion date — so the deadline stops being the risk.
A2Z Bridging Ltd · Authorised & Regulated by the FCA · FRN 808769 · We are a broker, not a lender.
Commercial Mortgage and VAT Loan FAQs
Yes — and on a commercial purchase where VAT is charged on the price, you often have to. A commercial mortgage advances a percentage of the purchase price; it does not cover the VAT element on top. A VAT loan is a separate short-term facility, usually unsecured, that funds that bill at completion and is repaid once HMRC refunds the VAT. On this Ilford case the mortgage was £1,312,500 at 75% LTV, and the VAT loan sat alongside it. Both were arranged together and drawn on the same day — which is the part that matters. A mortgage offer on its own would not have completed the purchase.
After exchange the completion date is contractual. If you cannot complete, the seller can serve a notice to complete, and if you still cannot perform, your deposit is at risk and the contract can be rescinded. This is why a post-exchange case has to be run differently to a normal application — every stage moves in parallel rather than in sequence, and the lender has to be one who can genuinely work to the date rather than one who quotes the best rate. In this case the client had already exchanged when the file came to us, and the purchase completed inside five weeks with the deadline intact.
It is possible, but the lender list is short. A shell unit generates no income on day one and cannot be let until its Energy Performance Certificate is in place, so many funders either decline it or drop the LTV. The route through is placing the case with a lender who will assess the asset on its value and the borrower's plan rather than on current income — and, where the certificates are still being produced, one who will underwrite on draft EPCs instead of holding the file until final documents arrive. That is exactly what happened here: 75% LTV on a shell-condition warehouse, approved on draft EPCs.
Commercial investment lending typically sits between 65% and 75% LTV, and buying through a limited company or SPV is standard — most commercial lenders expect it and price it no differently, provided the structure and the directors are presented clearly at the outset. This deal was written at the top of that range: £1,312,500 against a £1,750,000 valuation, or 75% LTV, on a five-year term at 7.42% fixed, to an SPV borrower. Where an SPV case usually loses ground is not the structure itself — it is the structure surfacing late in underwriting.
A standard commercial mortgage often runs eight to twelve weeks. It moves faster when valuation, legals and underwriting run concurrently and the case is placed correctly the first time — a mid-process lender switch is what usually costs a deal two to three weeks it cannot spare. This purchase completed in five weeks with a VAT loan arranged alongside it, against a completion date that had already been fixed at exchange. If your date is already set, tell us the date first and we will work backwards from it.