Getting lending for commercial property is a little different from getting a home loan.
The drivers behind commercial property are different – and often less emotional – than a place that people live in. As a result, the criteria surrounding much of the funding in this area has remained largely unchanged over the recent years.
The basic level the trading banks promote is a 65% loan to value ratio as a maximum, but the fact is that there is the ability to borrow up to 100% of an owner-occupied commercial property.
The costs for commercial loans are higher than residential. As a guide they would be anywhere between 1% more than residential rates to 2.5% more.
As with residential lending, every bank looks at commercial property funding in a different way and have their own views on how much they will lend against it, given a range of conditions such as location, type, strength of the lease or owner-occupier and industry.
The key is to have it arranged before going unconditional on a new purchase – and this is especially relevant for commercial property. There a many more aspects to funding commercial property than obtaining lending against residential security.
If you are considering purchasing commercial property, give the friendly experts at Edge Mortgages a call