Commercial property finance secrets exposed

When financing a commercial property purchase the mainstream mentality is,

• Interest rates are typically higher
• The maximum loan term is 15 years
• You can’t have an offset account on a commercial property loan
• The maximum LVR is limited to 65%
• Annual reviews are mandatory
• Directors guarantees are mandatory

The above is a traditional view of commercial property, however there are some great options out there with mainstream lenders whereby,

• Interest rates are lower than residential home loans (dependent on various factors),
  • some lenders price based on loan amount and LVR whereas
  • some lenders price based on risk of the overall transaction taking the customer / sponsor into account
  • lo doc loans can be cheaper then full doc loans (lender specific policy)
• Maximum loan terms of up to 30 years
  • this can be particularly favourable as it increases customers borrowing power by having repayments spread over a longer period
• A few lenders offer offset accounts linked against commercial property’s
  • these offset accounts are typically capped at $1m.
• Several mainstream lenders will go up to 80% LVR for the right property and borrower
• Many lenders don’t require annual reviews for loans sub-$1m (or higher in some instances)
• Directors guarantees may not be required where the security and borrower / customer are satisfactory (e.g. Conservative LVR)
• Pricing of commercial loans is generally based on,
  • A banks standard business loan index rate plus a margin based on risk
  • A non-risk based business loan rate on smaller, fully secured loans or
  • BBSY plus a margin.

 Buying commercial property or wondering whether the terms on your existing commercial property loan are right for you?

Make sure you reach out to us via info@blambles.com.au and we’ll work through the nitty gritty with you to ensure you get a finance solution that works for you.

 

Invest wisely, borrow carefully and sleep comfortably