Financing Commercial Real Estate Property

Unlike residential financing, commercial property finance is more complex and has additional requirements. Try to work with a lender that specialises in commercial property finance.


Normally financing companies will lend up to 70% of the value of the property but this value is often based on the rent/yields achieved by the property. Ensuring that you have the right amount for a deposit and being able to prove how you intend to finance the monthly repayments is essential.


Please note that interest rates for commercial lending will be higher than for residential so you need to compare rates and terms in order to get the best deal.


It may also be a good idea to attain independent advice when researching a lender so that you know what your contractual rights and obligations are.



Please note when reading these posts, you should always seek your own independent legal and financial advice.

 

Just to add to this, there are some good easy CIP finance deals around currently. For example, lenders who will do 65% where rent in is greater than or equal to loan repayment, with minimal paperwork apart from lease verification (hence need to be wary of owner occupier business owners selling with an inflated rent amount) and generally no annual review (depending on security type).

Note that is investment only with this product, no owner occupier or SMSF.

 

Thanks for this guys.
A follow up question, do lenders adopt similar serviceability tests? ie what if you wished to purchase a vacant commercial building, would this even be considered?
Thanks,
blw

 

I know that @Corey Batt can hook up that loan davem mentioned above.

 

Commercial finance is very different resi finance - you can't use a proposed rental income for commercial property and many lenders won't even accept a tenant in place if the tenant is on an expired lease.

Also there are heaps of things to factor in such LVR, loan term and general revaluation and review policies. Also be very careful of IO terms with commercial property as they work differently to resi products and lending.

 

How does a Comercial IO loan differ to a resi IO loan?

 

The terms and conditions.

 

Fees and charges.

 

Any idea of interest rates for say a 2 mil lend at 50% on a quality CIP ?

 

Hi Ace

I refinanced with ANZ Private a few months back at 60% LVR for 4.5% for a sub 1m cip lend

Fixed c 2 years and reviewable after 3. To go lower LVR was a minor saving.

I have another CIP loan with ING on a 15 year term variable rate is around 5.6%

You pay to not have reviews etc

 

I've heard commercial loans aren't effected by apra, is this correct?

 

Correct