Commercial property loan options
I understand finding the right commercial loan can be complex or overwelming if you are looking to invest or use the premises for your business.
Some general key point when purchasing commercial property when you need a commercial loan.
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Investing in Commercial Property Tips
- LVR can very depending upon the type of property security. Most banks do 65 to 70% LVR also there are a few banks who can go up to 80% LVR on commercial properties “depending on the security type”,
- Interest rate; Will vary a lot from bank to bank based upon the following; LVR, loan amount (below $1.0M or over $1.0m loans) to applicants risk profile E.g. total assets and liabilities and type of industry or business ANZSIC code.
- Most banks will charge an application fee. Some banks do have no application fees waivers.
- Valuation report on the Commercial property is at purchaser cost.
- Commercial loans generally have monthly fee. This will vary from bank to bank and the type of commercial loan.
- Generally most bank do not offer offset account with commercial loans, there is few smaller banks offering 100% offset account.
- Most banks only do commercial loans if it is trading business purchasing the property..
- Loan terms will vary with banks. Generally commercial loan terms are 15 years, with 5 years interest only, there are other banks who offer 20, 25 and 30 year loan term with 5 years interest only periods.
- Loans under $1.5 Million, do not have annual reviews.
- Loans over $1.5 Million will have annual years by the bank. Basically, each year the bank and your Broker will call you for update financial information, to make sure your business or your income is the same as the initial application and has not dropped.
- There are a few smaller banks who offer no annual review for loans over $1.5 Million “basically set and forget”. Lately this has become very popular with my customers. As one of my customer noted; “no more annoying questions from the bank and I can just get on running my business”
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Types of commercial loans
No Doc applications
These types of application are for short term periods only, generally max loan term 3 years. They are designed for someone or company to buy a commercial premises without using financial information. Example. You find a property or land you like, and you need to make decision very quickly to buy or lose it. But your financials have not been completed or you cannot wait for the banks to approve the full application ‘You get the general idea”. Please note: This type product has a lower LVR and the interest rate are higher, plus bank fees
Lease doc
Some banks offer application based upon the fully arm’s length lease income and if the lease income meets the loans Interest cover ratio “ICR” to service the proposed loan. This type of Lease doc application are very common, due minimum information required, versus a full doc application.
Full documentation application:
Basically, Full doc Application will need to understand all your personal and business Assets, Liabilities, Income streams etc. “lots of paperwork”
Low doc applications
Minimum financial information. E.g. using BAS statements, with self-declared and/or accountants letter.
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I can guide you through finance options:
- Purchase a business
- Working capital for your business
- Refinance your business loans.
- Purchase a commercial property
- Build a commercial property, for either investment or owner occupied.
- Invoice financing or known as debtor financing
If you are planning on purchasing commercial property or buy a business, it is recommended to talk to your Broker not the bank. Reason; Your bank only has their loan products. Brokers have all banks loan products to choose from. Unfortunately your bank might not have the loan product that would suit needs and your business.
I am happy to discuss your commercial loan options with you and help explain loan strategies to owning commercial property.
Want to know more? Feel free to contact me at my office, I am always happy to help answer any of your questions.
Phone 0418 604 910 or email; [email protected]
What is the right loan for you?
Schedule a free consultation with our team and let’s make things happen!
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Exceptional financial solutions
At Expat Property Finance, our mission is to provide exceptional financial solutions to a diverse range of income earners, from expats and self-employed professionals to PAYG employees. With access to over 35 lenders, including private lenders when needed, we are uniquely positioned to offer the most suitable lending options tailored to the specific needs of our clients.
