Commercial Loans

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What is a commercial loan?

A commercial loan is for investors looking to purchase or refinance commercial properties. Commercial properties are defined as a real estate property that is used for business purposes. Commercial properties can include industrial property, shopping centres, office buildings, medical centres, hotels, restaurants, farms or even vacant land.

commercial

To qualify for a commercial loan you will need to demonstrate:

  • That you have good credit history on all of your statutory payments, banking and mortgage accounts, and that you have no other outstanding liabilities.
  • That you own residential securities with high equity.
  • Since the Global Financial Crisis many financial institutions are now demanding that they will only lend between 60-75% of the value of the commercial property.
  • In some instances where a person has large amounts of disposable savings and no residential securities, they will still be more than likely able to qualify for a proposed loan.
  • The capacity to service a loan with high yielding rental returns from the tenants. A financial institution considers an application from a potential commercial investor by looking primarily at the cash flow of the property. It is essential that the net operating income exceeds the proposed commercial loan repayments between 25-45%.

Options for commercial loans can include:

Fixing – 1 – 5 years with options of extending the fixed period
Variable – normally to a maximum of between 15- 20 years

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