What is commercial property finance?
Commercial property finance is a type of specialist financing used to purchase, develop or refinance commercial real estate. The financing options may include a variety of loan types, such as commercial mortgages, bridge loans, mezzanine loans and construction loans.
Typically, commercial property finance requires a higher deposit and will have higher interest rates and fees than residential finance, thanks to the increased risk associated with commercial real estate.
Each lender will have their own way of assessing applications, though they will all generally consider the:
- Property’s location
- Property type
- Security for the loan
- Loan-to-value ratio (LVR)
- Borrower’s financial position and creditworthiness
- Strength of the tenants and the length of time left on their lease
- Current and future state of the economy
As a result, the rates and terms you get on commercial real estate loans can vary widely depending on the lender. To further complicate matters, they won’t usually be publicised.
Given this, you’re likely wondering how to finance commercial property?
Well, one way would be to go direct to the bank. However, that will likely involve countless hours spent doing research and handling paperwork. What’s more, if you apply to the wrong lender, you could get knocked back – potentially damaging your credit score in the process.
Alternatively, you could have an expert commercial real estate loans broker like Crowd Property Capital do all the running around for you.
To discuss your commercial property investment options, book a free strategy session with David Lovato.
Phone: 0434 932 634
Email: [email protected]