Services – Commercial Property Loans

Commericial Property Loans

Types of security properties

Standard Security

The uses of commercial property are quite varied, and include the following:

  • Warehouses
  • Office Buildings
  • Factories
  • Shops
  • Shopping Centres
  • Land Subdivisions
  • More than three units in one residential development
  • Residential property development finance

Specialised Security

There are also “specialised” commercial properties that a lender will lend against, however, these properties are considered higher risk and therefore the deposit required to purchase this type of property would need to be larger with a more detailed and therefore costly valuation being required.

  • Aged Care, like residential care and respite centres
  • Short Term Accomodation, like a motel, hotel or caravan park
  • Private schools
  • Petrol Stations, and specialised retail outlets
  • Pubs and Clubs
  • Restaurants
  • Car Yards
  • Function Centres
  • Income producing farms
  • Child Care Centres
  • Shopping Villages
  • Land banking sites or Englobo land
Commercial Property Loans share similarities with residential home loans in that they enable borrowers to obtain a specific amount of debt based on the value of the property being used as collateral, with an interest rate set by the lender. The largest point of difference is that commercial lending is not regulated by the National Consumer credit Act (NCCP). Therefore, commercial property borrowers do not have the same consumer protection laws in place like regular residential lending.

How much can you borrow?

Below is a general guide on how much debt can be secured against a commercial property:

%

If valued up to $1m

%

If valued up to $2m

%

If valued up to $5m

You may be able to borrow up to 100% of a commercial property if it is also secured by a residential property. If the property is valued over $5m and up to $100m there are lenders who will look at this scenario, but only on a case-by-case basis.

Commercial Property Loan features

Commercial property loans have limited features compared to residential home loans, with only basic options available for borrowers.

  • Offset accounts are only available with a select number of lenders
  • Redraw is common, but not all lenders allow it
  • Internet banking is generally available, however some lenders do not offer it
  • Extra repayment is generally available on variable loans
  • Cash out is available depending on the purpose
  • Interest Only repayments are available up to 10 years, then it defaults to interest and principal repayments
  • Loan terms are generally up to 25 years, however this can depend on the bank

Commercial Property Loan Fees

Fees are generally much higher for commercial mortgages than residential mortgages. Below is a list of possible fees associated with a commercial property loan:

  • Application Fees
  • Establishment Fees
  • Line Fee or Administration Fees
  • Valuation Fees
  • Lender Solicitor Fees
  • Origination Fees

Application fees and interest rates are generally negotiable, so it pays to have an experienced mortgage broker on your side doing the negotiation on your behalf.

If you are thinking about purchasing a commercial property then you will need to get in contact with one of our expert mortgage brokers by calling 02 9934 9735 or

Getting in touch here