HOW DO I BUY OR INVEST IN COMMERCIAL PROPERTY?
Are you looking for a commercial property for an investment or for your business operations? No need to be scared off; this type of investment may be more within your reach than you think.
In general, the process is very similar to buying residential property with the key differences being the requirements for larger deposits, reduced repayment terms, slightly higher fees and interest rates.
The security and property value play a large part in commercial lending approvals. As some of these are considered higher risk, they might require a higher deposit and more detailed analysis around the valuation completed.
Commercial property loans are certainly a bit trickier than a home loan, however Beyond Broking have assisted many business owners and commercial property investors in successfully obtaining commercial mortgages and refinancing.
Regardless of your commercial, industrial or business property type, we are here to help you navigate through any unfamiliar territory and ensure you obtain a suitable loan with competitive rates.
SOME OF THE MOST COMMON QUESTIONS OUR CLIENTS ASK:
We’ll need a few items from you to start the process which may include but are not limited to:
- Proof of income (pay slips and bank statements)
- A deposit backed by a proven savings history
- A good credit history (we can still help if you don’t)
Commercial lending is typically more restrictive to residential lending and that is reflected in a higher deposit requirement. At least 20% plus purchase costs will be required for purchase but in some cases utilising residential property as security for the purchase can reduce this.
The assessment of this is generally different to a residential loan. In order for us to be able to calculate this we would need to assess your full financial situation.
As well as the normal fees associated with the purchase of property like stamp duty and conveyancing you will need to plan for more expensive lender related costs including valuations, application and settlement fees. It is also worth noting that given the inherent risk in commercial property ownership you should expect to pay a higher rate of interest and a reduced loan term relative to residential property.
Variable interest rates move up and down and normally relate to changes in official interest rates set by the Reserve Bank of Australia (RBA). A variable rate loan is beneficial when rates are on the decline.
Fixed interest rates don’t move. You can set (fix!) your rate for a particular period of time, normally between one and five years, and is most beneficial when interest rates are on the rise.
You should expect 15 to 20 years in repayment terms. This can be increased in some cases when utilising residential security to facilitate the purchase.