WHAT IS A COMMERCIAL PROPERTY LOAN?

Commercial property finance is a loan provided to assist with acquiring or constructing real estate assets such as shops, office buildings, multiple residential dwellings, or industrial warehouses and factories. Typically, loan size would start from $500k.

 

Why use a commercial finance broker?

Buying commercial real estate can take a lot of work and planning even before you look for a loan! Commercial lending is a world of difference to residential lending, so it pays to have an experienced commercial finance broker behind you.

 

Finance brokers can be good value and find you a loan that suits your needs with competitive interest rates. 

Who do commercial mortgage brokers help?

Our specialised brokers can help with sourcing loans for any commercial property transactions. Commercial property loan (as opposed to residential) applies when you're looking to take out a loan to purchase a commercial property. There are 2 main categories for commercial properties; standard and specialised.

 

Standard commercial properties are the most widely acceptable security, this includes:

  • Offices

  • Factories

  • Warehouses (showrooms, storage units, etc)

  • Retail space

  • Shopfronts

  • Multi-residentials (block of units, houses, or townhouses)

Specialised commercial properties pose a higher risk as they're harder to value and sell. This includes:

  • Accomodation

  • Aged care centres

  • Car yards

  • Childcare

  • Farms / rural properties

  • Petrol stations

  • Vineyards

  • Supermarkets

  • Schools, etc

Lenders generally look at 3 main things when it comes to commercial lending: cash flow, character, and collateral. A good cash flow instils confidence in the lender that you'll be able to repay the loan. Both your business and personal credit scores are considered when applying for a commercial loan. The type of collateral and how they're owned is also considered to secure repayment of the loan to the lender.
 

WHAT ARE THE benefits OF using a COMMERCIAL finance broker?

A broker may save you legwork

Brokers have established relationship and regular contact with wide variety of lenders, some of which you might not even know about.

A broker may have better access

Some lenders work directly with brokers and rely on them as gatekeepers to bring suitable clients. Brokers may also get a sharper rate from lenders due to volume generated.

A broker may be able to manage your fees

Several different types of fees can be involved in taking on a new debt or working with a new lender, including origination fees, application fees, and appraisal fees. In some cases, brokers may be able to get lenders to waive some of these fees, which can save you hundreds to thousands of dollars.

HOW DO I QUALIFY for a commercial property loan?

This is one of those "how long is a piece of string" questions. With access to multiple lenders on our panel, Twelve Grains Capital finance brokers can help organise a loan even for your quirkiest scenarios.

But one thing for sure - lenders would want to see some sort of contribution, either in the form of cash or equity. Generally for loan amount of $1M or less on standard properties, you could get away with as little as 20% contribution, and for anything above, you'd be required to put in more.

Serviceability isn't as straight forward as residential home loans either. Apart from your net income, lenders would consider the strength of the lease, location, projection, etc. 

In short, commercial property finance is a very tailored, risk based approach with some products you don't see in the residential home loan space such as non-recourse loans or lease-doc loans.

WHEN SHOULD I APPLY for a commercial property loan?

The length of time to approve a business loan varies depending on the chosen lender and the business' unique circumstances.

 

Approval can be completed within a matter of days or can take several months usually depending on the complexity of the transaction.  A finance broker can help borrowers estimate the length of time to get loan approval at the outset of the application process.

It's never too early to speak with a broker.

Why TWELVE GRAINS CAPITAL commercial mortgage broker?

Why use a Twelve Grains Capital commercial finance broker? It’s simple...

  • We have a dedicated team of managers in Sydney, Melbourne, Brisbane, and Australia-wide with commercial banking experience, who support our brokers to help their customers find the right solution.

  • We have access to one of the largest commercial Lender panels which provides our brokers with competitive rates and products for their customers.

  • Your Twelve Grains broker will act as the customer advocate when speaking to Lenders to help problem solve and tailor a solution that suits your needs.

  • Our brokers have access to non-bank funds that may suit difficult or complex scenarios.

Where To From Here?

Speak to a specialist about commercial property finance

You've considered your options, and decided you'd like to purchase a commercial property, or maybe you have more questions. The next step is to get in touch with us. Don't worry, this won't appear on your credit report.

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David R. Sutantyo

Managing Director

0413 505 402

david@twelvegrainscapital.com

FAQ

What are typical commercial loan terms?


Unlike residential loans, the terms of commercial property loans typically range from five years to 20 years.




How much deposit do I need for a commercial property loan?


Commercial property loans usually need a deposit of at least 30% of the purchase price.




Is it harder to get a commercial loan?


Not necessarily. With a good team of experienced broker, accountant, and lawyer behind you, purchasing and getting a loan for a commercial property can be a lot less onerous than getting a home loan at times.




Who has the best commercial real estate loans?


There is no one size fits all product in lending. The best lender and product will boil down to what sort of property you're purchasing and your unique circumstances. Twelve Grains Capital brokers can help you get the best product to suit your situation.




What is a good commercial mortgage rate?


Rates are at record low. A loan secured against commercial property can range from as low as mid 2's to as high as the 20's. There is a huge range due to the diversity of asset class and risk as well. But they're typically sitting at 3-5% range for vanilla deals.