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What do you need to know about commercial property loans?

Buying your own commercial premises comes with some big benefits. You won’t have to worry about lease renewals or hefty rental increases. Then there’s the fact your business owns an investment that could increase in value over the long term.

But commercial premises don’t come cheap, which means you’ll probably need a commercial property loan. So what do you need to know about this type of finance before you apply?

The first thing you need to be aware of is how much commercial property finance differs from residential.

Take interest rates, for starters.

Unlike residential home loans, interest rates for commercial loans are not usually publicised. And the reason is that commercial loans are more complex, with pricing determined by how much risk your application poses to the lender.

To assess that, the lender will look at several factors including the:

  • Property’s location
  • Property type
  • Security for the loan
  • Loan-to-value ratio (LVR)
  • Borrower’s financial position and creditworthiness
  • Strength of the tenants (if any) and the length of time left on their leases
  • Current and future state of the economy

For example, say you want to buy a service station or car dealership. You’ll likely get charged a higher rate than if you were purchasing a warehouse or office. That’s because specialised property is generally seen as riskier than standard commercial premises as it appeals to a smaller pool of tenants or buyers.

To further complicate matters, each lender assesses risk differently. As a result, the rates and terms you can get on a commercial loan can vary significantly depending on which lender you apply with.

What’s more, different lenders have different lending guidelines. So if you apply to the wrong lender, you could get knocked back – potentially damaging your credit score in the process.

What do you need to know about commercial property loans?

Buying your own commercial premises comes with some big benefits. You won’t have to worry about lease renewals or hefty rental increases. Then there’s the fact your business owns an investment that could increase in value over the long term.

But commercial premises don’t come cheap, which means you’ll probably need a commercial property loan. So what do you need to know about this type of finance before you apply?

The first thing you need to be aware of is how much commercial property finance differs from residential.

Take interest rates, for starters.

Unlike residential home loans, interest rates for commercial loans are not usually publicised. And the reason is that commercial loans are more complex, with pricing determined by how much risk your application poses to the lender.

To assess that, the lender will look at several factors including the:

Property’s location
Property type
Security for the loan
Loan-to-value ratio (LVR)
Borrower’s financial position and creditworthiness
Strength of the tenants (if any) and the length of time left on their leases
Current and future state of the economy

For example, say you want to buy a service station or car dealership. You’ll likely get charged a higher rate than if you were purchasing a warehouse or office. That’s because specialised property is generally seen as riskier than standard commercial premises as it appeals to a smaller pool of tenants or buyers.

To further complicate matters, each lender assesses risk differently. As a result, the rates and terms you can get on a commercial loan can vary significantly depending on which lender you apply with.

What’s more, different lenders have different lending guidelines. So if you apply to the wrong lender, you could get knocked back – potentially damaging your credit score in the process.

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What do our clients say about their experience?

“My bank said no when I approached them for development finance. Thankfully, Commercial Loans helped get me the funding I needed. Very impressed. They’ll definitely be my first port of call next time around.”
Mark H.
“What more can I say…. Professional, efficient, always looking out for the best interests of the client. Commercial Loans simply get the job done!”
John D.
“I will definitely be coming to Commercial Loans for their expertise again. They succeeded in helping us with a great package, and took care of the whole process from approval to settlement. definitely worth a call if you are looking for finance of any sort.”
Michael D.

Why it pays to work with Commercial Loans

Wondering why you should use an expert finance broker like Commercial Loans rather than go direct to the bank?

Here are four reasons:

Expertise – At Commercial Loans, we can help you identify the lender that’s most likely to approve your application. This doesn’t just save you a considerable amount of time and effort. It also protects your credit score.
Experience – When you apply for a commercial loan, there are a lot of potential pitfalls you need to avoid. We know the ins and outs of each lender’s guidelines, so can guide you through the process and clear obstacles from your path.
Connections – The terms of a commercial property loan aren’t set in stone. So it can all come down to the relationship you have with the lender. And with more than 100 lenders on our books, we can leverage our network to negotiate a better rate for you than if you were to go it alone.
Specialism – Commercial mortgages aren’t like standard residential home loans. So you need to work with someone who understands the nuances of this type of finance – particularly when it’s a complicated deal. At Commercial Loans, commercial finance is all that we do. So we can get you the best result, the first time around.

All this means we can save you money, time and stress – whether you’re buying a commercial premise for your business or are a commercial property investor.

We can help you get finance for:

  • Purchase of all types of commercial property
  • Construction and development finance for commercial property
  • Specialist securities like Subway franchises, 7-Elevens and car washes
  • Lending up to 80% of the property’s value or 100% with additional security
  • Self-managed super fund finance
  • Low doc, no doc and bad credit commercial property finance

Talk To The Commercial Loans Team Today

Email Address

admin@commercialloans.com.au

Call Us

1300 169 200

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