Real Estate Commercial Loan are types of mortgage that are granted over the purchase of commercial property. This is different from a home loan as it does not require an LMI for low-deposit loans and have shorter loan repayment terms. Properties purchased for business use are considered commercial loans. A perfect example would be office blocs, hotels, shopping areas, and warehouses.
To be able to finance such purchase, your business may require a commercial real estate loan. This is also the case if you want to purchase an existing business. There are many options available out there and the process can be complicated and daunting. You might want to seek help from a mortgage broker to make the process easier.
Real estate commercial loan also comes in fixed, variable and combined interest rates, just like home loan packages. It also offers interest-only repayments for a certain period of the loan repayment term.
Common Types of Real Estate Loans
- Purchasing or refinancing a commercial property
- Construction loans for the development of a property
- Purchasing or refinancing a business
How to Qualify for a Real Estate Commercial Loan
Commercial real estate finance is less stringent compared to residential mortgages. Banks are not constricted with lending policies. Banks do not have legal obligations to provide proofs that the applicant is indeed capable of repaying the mortgage. However, there are still a set of documents required when applying for a real estate loan.
- Full financial documentation
- Lease documents
- Profit and loss prediction or business forecast
Applying for a Real Estate Commercial Loan
Provide the necessary information and documentation your lender requires for the application. The type of property and amount you will borrow also affects the requirements needed to process your loan. Provide the following on your application. Ideally help from a mortgage broker is advised for a better experience and more efficient process.
Personal Information and Work Details. Similar to home loans, you will need to provide personal information, proof of identity and proof of source of incomes when applying for a commercial loan. You may need to provide your ABN and full contact information as part of your loan application.
Financial Information. Details about your assets and liabilities are required in your application. Cash flow projections and the amount of your saved deposit is also required by some lenders to be able to determine your ability to keep up with repayment.
Commercial Property Details. The lender also requires the details of the property that you want to purchase. This includes the location, features as well as a professional valuation to be able to determine its worth. Current lease agreement and existing tenants are also required for purchasing investment properties or an existing business.
Other Relevant Information. Your lender may request several other details concerning your loan application. Additional requirements are needed, depending on how huge your loan will be.
A mortgage broker can help you prepare the application and help you address all the necessary criteria to give you the best possible chances of getting your real estate commercial loan approved. In the event of a refused or delayed approval, a mortgage broker can also help you adjust your application and increase your chances of getting the finance that you need.