Commercial Property Loans
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Stratovestfinance > Commercial Property Loans
Max LVR up to 80%
Use for income-producing properties
Low doc and lease doc loan options available
Loan term up to 30 years.
What is a Commercial Property Loan
A Commercial Property Loan, also known as a Commercial Real Estate Loan, is a simple way to borrow money for buying a commercial property.
Commercial property finance involves obtaining loans for the acquisition, development, and improvement of various commercial real estate assets, including shops, offices, warehouses, and factories. This financing can be utilized to either build and develop properties for eventual sale or to acquire them with the intention of leasing them out.
The intention for which you seek the loan can impact the qualification process, as lenders categorise loans into low, medium, or high risk based on their designated use. For instance:
- Commercial property investments aimed at leasing are considered low risk.
- Acquiring the property for your business operations is seen as a medium-risk endeavour.
- Using the funds for day-to-day operations and addressing liquidity shortfalls is regarded as high risk.
Critical information sheet
Our loan guide
Commercial Property Loan
Loan amount
Starts from $100k
Interest rates from
From 10.99% p.a.
Loan term
No Doc: Up to 3 years | Lease Doc/Full Doc: Up to 30 years with up to 5 years Interest only option
Pre-approval time
24 – 48 hours
Unconditional approval & settlement time
10-15 Business days
Repayments
Principal & Interest | Interest Only & | Capitalised Interest
Security
Required with funding possibilities up to 80% Loan to Value Ratio (LVR)
What you need to know
Can be used for
To purchase a commercial property
Refinance into a lease doc loan
Documents required
Valid identification proof
Security Details
Exit Strategy
Others depending upon loan product
*The information provided in critical information sheet is intended as a guide only. Please contact us for more information.
What you should know about commercial property loans
Have questions? Speak to our experts!
What types of commercial property loans are available?
Traditional Commercial Mortgage: A standard loan for purchasing or refinancing commercial real estate.
Commercial Bridge Loans: Short-term loans used to bridge the gap between immediate financing needs and long-term funding.
Commercial Construction Loans: Loans used to finance the construction or renovation of commercial properties.
Private Lenders Loans: Short-term loans provided by private lenders, typically at higher interest rates, based on the value of the property.
Pros and Cons of commercial property loan
Pros
Investment opportunities: Allow businesses to invest in real estate, providing opportunities to generate income through rent and potential property appreciation.
Long-term financing: This loan comes with longer terms than other types of business loans
Cons
Higher Deposit: Commercial property loans typically require a substantial down payment.
Higher Interest Rates: Commercial Property loans often come with higher interest rates compared to residential property loans, although some lenders offer comparable rates.
Key Factors to consider while applying for a commercial property loan
Risk and Interest Rates:
Commercial properties are seen as riskier investments, so lenders charge higher interest rates and have stricter rules for commercial loans. However, the interest costs can be claimed as a business expense and in case of leased properties can be set off against lease income.
Application Process:
When you apply for a loan for a business property, lenders not only look at your financial situation but also consider the property itself, including its potential income, location, and demand in the market.
Costs and Valuations:
Getting a commercial property valued is more expensive, and you might have to pay for it yourself. In contrast, lenders usually cover valuations for homes valued under $2,500,000.
Regulation Differences:
Unlike home loans, commercial loans aren’t as regulated. This means you won’t have the same protections, and the rules are different.
Insurance and Loan Terms:
There’s no Lender’s Mortgage Insurance (LMI) for commercial loans, so you’ll likely need a bigger upfront deposit. Commercial loans also have shorter terms compared to home loans.
Pricing and Serviceability:
Pricing for commercial loans varies a lot, depending on factors like the type of business and its location. Lenders also use a different method to make sure you can afford the loan.
Costs and Reviews:
Commercial lending is generally more expensive, with higher interest rates and fees, especially if your business is considered risky. The bank will also review your finances regularly even after you get the loan.
Security Agreement:
You might have to provide a General Security Agreement for both the property and your business assets unless the income from the property is high enough to cover the loan.
Understanding these aspects are crucial because commercial lending is more complex than getting a loan for a home.
Full doc vs low doc
Full-doc loan
- Requires Financials, tax returns, lease agreements, ATO Portals, BAS Statements etc.
- Comparatively cheaper and longer term as compared to a no doc/low doc loan option.
- Approvals may take longer as compared to a no doc/low doc loan option.
- While this option demands more upfront effort, it gives a greater confidence for lenders due to detailed documentation which in turn provides customers with a more competitive interest rate.
No Doc/Low-doc loan
- No financial statements or tax returns are required.
- This gives businesses with tight profit margins more choices and flexibility, usually offered by non-bank 2nd tier / private lenders.
- Comparatively expensive and shorter term as compared to a no doc/low doc loan option.
- The application and approval process is usually quicker as compared to a full doc application.
How do I apply for a commercial property loan?
1.Submit Application
First step is to simply fill out the application form with the required information and loan request.
2.Get Indicative Quote
Once the application is received, our lending specialist would get an indicative quote within 24-48 hours.
3.Letter of Offer (LOO)
Once we receive the mandate to proceed basis indicative quote, we get a formal letter of offer from the lender.
4.Valuation and Legal Docs
On receipt of signed LOO, the lender would initiate valuation and get loan docs prepared.
5.Disbursement
Once we receive the mandate to proceed basis indicative quote, we get a formal letter of offer from the lender.
Commercial vs Residential property loan
Commercial loans are not the same as home loans, and they have some important differences. Here are some key differences in a snapshot.
Commercial loans are not the same as home loans, and they have some important differences. Here are some key differences in a snapshot.
Commercial Property Loan
For business entities to purchase a property for business use
Usually up to 80%, though this varies from lender to lenders depending on the nature/product
Generally higher than residential property loans
No Doc: Up to 3 years | Lease Doc/Full Doc: Up to 30 years
Residential Property Loan
Made for individual borrower to purchase a residential property as a primary place of residence or for investment purposes.
Usually up to 95% with the inclusion of lender’s mortgage insurance.
Generally lower than commercial property loans
Up to 40 years
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