What is a Commercial Loan?
A Commercial Loan is a loan secured by a commercial property such as an office building, shopping center, industrial warehouse, or a building in use to run a business such as dairy.
A Commercial Loan is a loan secured by a commercial property such as:
- Offices in various sizes – anything from either a single floor or suite in a larger building, to entire buildings
- Light industrial units, warehouses and showrooms from a few square metres to 3000+
- Heavy industrial premises
- Retail premises, usually small, sole-operator premises although entire shopping centres occasionally come onto the market
- A building in use to run a business such as a dairy
- Development projects, including major residential or retirement complexes and tourism enterprises.
Commercial property, in many cases, can be purchased with tenants and leases in place.
In New Zealand, tenants are liable for fitouts and repairs. They are also usually liable for utilities, rates and insurance. This can mean a better net return for the commercial property investor.
Advantages of a Commercial Property:
Generate substantial Income from leases
One of the biggest benefits of commercial property is that the asset is generally secured by leases which provide a regular income stream and usually a significantly higher return than typical stock or residential property.
Mortgage repayments on the commercial property, depreciation deductions and maintenance costs can guard a large portion of your lease income. It is recommended that you consult your tax advisor or accountant to understand all of the benefits.
Excellent appreciation of asset value
Commercial properties tend to significantly increase in value from internal factors such as facilities added for the use of the business, improved accessibility, security controls to protect the operating business. These all improve the usability and desirability of the asset and external factors such as supply and demand imbalances.
Lower your business expenses
A lease can be a significant expense for a business operating out of a commercial premise. Having your own commercial property can remove the lease expense and improve your business income and profitability.
How much can I borrow for a Commercial Loan?
On a commercial property, banks generally lend up to 65% of the value of the property or the purchase price. It is possible to get additional loan towards the commercial property by offering the banks other assets in security such as your home or investment property. Banks generally lend maximum 80% of the value of the home being offered in security.
Commercial Loan repayment terms
Most commercial loans repayment period is between 10-15 years. If you have borrowed some money to utilize in the business by offering a residential property in security, the funds secured against the home will have repayment period of 30 years. Interest rate on commercial loans is usually 1-2% higher than standard home loan rates.
What documentation do I need for a Commercial Loan?
- Commercial Property Sale and Purchase Agreement.
- Copy of the Lease Agreement between you and the business leasing the commercial property along with the mention of commercial rent excluding GST.
Why Choose GFS as your finance broker?
High loan approval rates
Approval of a business loan or commercial loan largely depends on proper presentation of numbers and customer background. Take advantage of our experience in this area to ensure you a have a higher chance of getting your loan approved.
Business loans at home loan rates
We can evaluate your current rates and tell you if you can get whole or part of your business loan or commercial loan at home loan rates. These are generally 3-4% lower depending on your current loan and equity in your property.
A quick turnaround time for your loan approval can be the difference between a successful bid, and missing out. Timing is critical in business and commercial deals especially when there may be multiple people looking to purchase that business or property. Ensure you beat the competition by working with a team that will help you get the most out of your business or commercial loan as quickly as possible.
Room to Negotiate Interest Rates
When you are buying a new business or commercial property, the costs can stack up pretty quickly. We twist bank’s arm for you to ensure you get a competitive rate to help keep the mortgage cost down.
Secure maximum loan approval
When it comes to buying a business or commercial property, every dollar you can secure counts. We work with you to ensure bank can confidently give you the maximum loan possible to purchase that dream business or commercial property.