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Commercial Loans

 

Commercial loans and mortgages can be found with most lending institutions in Australia in 2012. Commercial loans are considered non-coded as they do not fall under the NCCP in Australia as their intended purpose is business.

What is a Commercial Mortgage?

Commercial loans and mortgages are loans advanced using commercial property as security. Most aspects of a commercial loan are similar to other property secured loans like residential. However, commercial loans differ as they require commercial security and the purpose must be commercial or business.

Commercial Property in Australia.

Commercial property in Australia account for a total of 20% of all properties bought and sold on the market. Commercial properties in Australia can be classified as different zones according to the nature of the property and its location throughout Australia. Different states and territories in Australia can have different views on particular properties. It’s best to check with your local council on the class of commercial property you are considering.

Commercial Loans from Banks and Non Banks

Commercial loans from banks and non banks are used predominantly for purposes related to business and investment. You can get a commercial loan or mortgage from a lender to finance any of the following:

  1. Commercial property
  2. Industrial property
  3. Retail property
  4. Residential property
  5. Business premises
  6. Property development
  7. Commercial construction

Commercial loans from banks usually undergo stringent assessment criteria before being accepted. In the majority of cases, most banks will generally lend to a maximum of 70% LVR. However, there are a small number of lenders who will lend to 75% LVR and also to 80% LVR. Further, a small number of banks will lend using low doc policy for a commercial loan.

Commercial loans from non banks are generally set and forget, whereby lenders set the loan and do not review the loan afterwards. No updated income statements are required after the loan settles in the near future unless a borrower wants to make major changes to their loan. Some non banks will take on loans with bad credit and lend to higher LVR’s in certain circumstances.

Small Commercial Loans

Small commercial loans are also known as small business loans. These loans are typically under $1m and are not generally subject to annual review by the lender. Small commercial loans can be approved up to 80% LVR on both full doc and low doc basis in Australia.

Large Commercial Loans

Large commercial loans can get very good interest rates if handled correctly by your mortgage broker. In many cases, we can negotiate very good loan terms from lenders based on economies of scale for the right borrower.

Commercial Property Loan Types

There are various product types for commercial property loans. Different lenders offer different product types for commercial loans. These can include:

  1. Variable loans
  2. Fixed interest rate loans
  3. Line of credit loans
  4. 80% LVR commercial loans
  5. 75% LVR commercial loans
  6. 70% LVR commercial loans
  7. Low doc commercial loans
  8. No doc commercial loans
  9. Bad credit commercial loans
  10. Lease doc commercial loans
  11. Lite doc commercial loans
  12. Full doc commercial loans
  13. Construction commercial loans
  14. 30 year commercial loans
  15. 25 year commercial loans

Rates for Commercial Property

Rates for commercial properties are generally slightly higher than other loan types. For strong and well established borrowers, the rate difference is minimal and can be very similar to a residential loan. . In other circumstances for borrowers who are not strong, the rate difference can differ by up to 5% for the weaker or non conforming type of borrower.

In 2012, it is possible to get interest rates for a commercial property at 5.1% from a handful of financial institutions and lenders. Further, many lenders can link the commercial interest rate to the reserve bank cash rate which gives regular movement based on Federal Reserve Bank decisions.

You can also obtain fixed rates for commercial loans between 1-10 years depending on the lender. In July 2012, you could obtain fixed rates as low as low as 5% for a commercial property loan.

If you have a commercial property and are seeking some finance for it, we invite you to contact us as we are commercial loan specialists. We can help structure the loan to suite your immediate and long term requirements at the best rates available on the market.