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A Commercial Property Loan, also known as a Commercial Real Estate Loan, is a simple way to borrow money for buying a commercial property.
Commercial property finance involves obtaining loans for the acquisition, development, and improvement of various commercial real estate assets, including shops, offices, warehouses, and factories. This financing can be utilized to either build and develop properties for eventual sale or to acquire them with the intention of leasing them out.
The intention for which you seek the loan can impact the qualification process, as lenders categorise loans into low, medium, or high risk based on their designated use. For instance:
Commercial Property Loan
Starts from $100k
From 10.99% p.a.
No Doc: Up to 3 years | Lease Doc/Full Doc: Up to 30 years with up to 5 years Interest only option
24 – 48 hours
10-15 Business days
Principal & Interest | Interest Only & | Capitalised Interest
Required with funding possibilities up to 80% Loan to Value Ratio (LVR)
*The information provided in critical information sheet is intended as a guide only. Please contact us for more information.
What you should know about commercial property loans
Have questions? Speak to our experts!
Traditional Commercial Mortgage: A standard loan for purchasing or refinancing commercial real estate.
Commercial Bridge Loans: Short-term loans used to bridge the gap between immediate financing needs and long-term funding.
Commercial Construction Loans: Loans used to finance the construction or renovation of commercial properties.
Private Lenders Loans: Short-term loans provided by private lenders, typically at higher interest rates, based on the value of the property.
Commercial properties are seen as riskier investments, so lenders charge higher interest rates and have stricter rules for commercial loans. However, the interest costs can be claimed as a business expense and in case of leased properties can be set off against lease income.
When you apply for a loan for a business property, lenders not only look at your financial situation but also consider the property itself, including its potential income, location, and demand in the market.
Getting a commercial property valued is more expensive, and you might have to pay for it yourself. In contrast, lenders usually cover valuations for homes valued under $2,500,000.
Unlike home loans, commercial loans aren't as regulated. This means you won't have the same protections, and the rules are different.
There's no Lender's Mortgage Insurance (LMI) for commercial loans, so you'll likely need a bigger upfront deposit. Commercial loans also have shorter terms compared to home loans.
Pricing for commercial loans varies a lot, depending on factors like the type of business and its location. Lenders also use a different method to make sure you can afford the loan.
Commercial lending is generally more expensive, with higher interest rates and fees, especially if your business is considered risky. The bank will also review your finances regularly even after you get the loan.
You might have to provide a General Security Agreement for both the property and your business assets unless the income from the property is high enough to cover the loan.
Understanding these aspects are crucial because commercial lending is more complex than getting a loan for a home.
Properties that are considered commercial typically fall into various categories, and these include:
Properties intended for retail businesses, such as stores and shopping centres.
Properties used for manufacturing or storage purposes, including factories and warehouses.
Properties associated with the hospitality industry, including hotels, motels, clubs, childcare centres, and petrol stations.
Properties used for medical purposes, such as clinics, hospitals, or medical offices.
Properties that combine different types of usage, such as a building with both residential and commercial spaces.
Properties related to agriculture, including farm buildings or structures used for agricultural purposes.
These categories encompass a wide range of commercial properties, each serving a specific purpose or industry. The distinction between commercial and residential properties is primarily based on the property's use and intended function.
First step is to simply fill out the application form with the required information and loan request.
Once the application is received, our lending specialist would get an indicative quote within 24-48 hours.
Once we receive the mandate to proceed basis indicative quote, we get a formal letter of offer from the lender.
On receipt of signed LOO, the lender would initiate valuation and get loan docs prepared.
Once we receive the mandate to proceed basis indicative quote, we get a formal letter of offer from the lender.
Commercial loans are not the same as home loans, and they have some important differences. Here are some key differences in a snapshot.
Being a small business owner, many of our clients are not sure of right loan product for their businesses. Our lending specialists understand their needs and recommend tailor made options.
Unlike business loan marketplace websites which use AI based algorithms to match your requirements, we provide obligation free personal consultation as every business is different and an AI based algorithm may not provide them the optimum solution.
We endeavour to achieve the optimum business loan solution for our clients at the most competitive pricing possible.
We understand the essence of time so don’t believe in wasting our customers time by giving false hopes. Transparent and clear communication is in our DNA.
Commercial property loans are typically accessible to both businesses and investors aiming to buy or refinance commercial properties. Contrary to a common misconception, these loans are not exclusive to businesses alone; individuals can also apply for and use commercial loans to acquire commercial properties.
You may be asked to enter into a General Security Agreement (GSA) when applying for a commercial real estate loan. A GSA is a legal document that grants the lender the right to secure the borrower's assets if they default on the loan. These assets can include commercial properties, vehicles, business assets, and others. In case of default, the lender can seize the assets listed in the GSA to recover the loan amount. In some cases, the beneficial owner might need to use their primary residence as security in the GSA to gain approval for a commercial property loan.
Yes, refinancing options are available to lower interest rates, reduce monthly payments, or access equity in the property. The process involves applying for a new loan to pay off the existing one.