Equity Release crossed with commercial

Question for the brokers.

If you had say 65% LVR on a property, with one of the majors, and no more resi servicability due to that lenders post-apra policies:

Could you refinance it as part of a commercial purchase and use the equity (say the 15% up to 80%) towards the 30% deposit on a commercial property?

Or is the only option to release the equity first via traditional resi loan?

 

You could if you could service.

 

The issue is that the lender would take into account the new loan (and the rental income) however it would need to be very positively geared to ensure you can service the 15% increase in loan.

Also some lenders make an additional discount to the rental income of commercial properties.

The only option you have would be to cross the commercial and resi securities which of course isn't ideal.

Are you sure you have maxed out your servicing under resi? Have you considered lenders like Homeloans Ltd?

 

Thanks Shahin

I'm not 100% sure I've maxed out my serviceability, but the question is more a theoretical one at the moment.

It affects future planning.

The reason I ask is that I've seen some commercial deals that don't look at servicability of the individual at all. For example 60% LVR with good lease.

Based on that, I was hoping there might be options of bundling the two together to get around APRA issues..

 

You can.

For your benefit if your close to your max servicing...choose a lender that offers a longer loan term + I/O - Which bank? - It's negotiable + case by case it's not policy as per say....

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The product your talking about is called a "lease doc commercial loan" where it's based purely on the "lease only" - the con to this loan is the short loan term...it's only a short term solution that may cause more pain in the future.

 

Thanks Mick

So now I understand why property trusts have to refinance their credit every few years, they will be on similar product to this.