It can be hard to find information on a commercial property loan in Australia. Unlike home loans, the lenders do not advertise rates and terms for commercial loans on their websites. This is because, unlike regular home or investment loans, the pricing or interest rates on commercial loans are negotiated on a case by case basis, often priced for risk depending on the asset and borrower’s strength.
How do you know which lender is the best and how much deposit you need for a commercial property?
In general, Australian banks require different amounts of deposit for a commercial property loan. These will vary depending on the property’s value but, in general, it is possible to borrow:
- 100% of the properties value using a guarantor, or second property to secure the loan.
- 80% of the properties value for loans up to $1M.
- 75% of the properties value for loans up to $2M.
- 70% of the properties value for loans up to $5M.
- Commercial properties worth over $5M to $100M can be negotiated on a case by case basis.
Different banks also have different appetites depending on the security property and the specific property type, which can include:
- Offices, factories, warehouses (including showrooms and storage units).
- Retail space, shop fronts, residential (block of units, house, unit or townhouse).
- Accommodation (backpacker, motel, hotel, resorts, bed and breakfast, caravan parks).
- Aged care centres, car yards, child care/preschools, farms/other rural properties, function/reception centres.
- Land subdivisions.
- Petrol stations.
- Commercial property developments (or residential).
- Restaurants, Vineyards, landfill/garbage dump/waste management facility.
- Shopping villages/centres.
A commercial property loan can also be for different purposes when compared to investment home loans which are regulated by the National Consumer Credit Protection act (NCCP).
Commercial loans have different features to home loans, including:
- Loan terms up to 25 years on commercial property security, and up to 30 years with residential property as security.
- Interest only terms up to 5 years, sometimes longer on application.
- Interest rate types including variable, fixed and bank bill facilities.
- Redraw can be allowed on certain loan types.
- Capitalised interest is also available for certain types of finance.
For more information on commercial property investment loans contact our team on 1300 88 73 28 or use our contact form.