Commercial Property Loans in Melbourne

Commercial loans are completely different from residential property loan, they are more complex and require special expertise.

People in Australia opt for commercial loans in order to procure multi-residential properties, industrial land, café, food, chains, and also to refinance established retail business. With commercial loans in Melbourne, you are able to develop and construct a single or multiple commercial properties and buy an established one.

One of the best commercial real estate finance company in Melbourne is Realloans. Our Melbourne Commercial Finance brokers with a good list of commercial lenders which include the major banks.

If you are looking for the right solution, you can choose from the below mentioned commercial loans solutions:

  • Purchase of retail, industrial, multi-residential and commercial property
  • Constructing retail, industrial, multi-residential and commercial property
  • Specialist securities such as child care centers, café, offices, hotels, motels, caravan parks and petrol stations
  • High LVR where you can borrow up to 80% of the properties’ value
  • True NO DOC commercial loans up to 65% LVR up to 25 years
  • Credit impaired solutions for those with a poor credit history
  • Lease Doc for investment purchases – no financials just rental income

Choose the Right Lender

Lenders are the people who are providing the loan to the people. There are numerous banks and private organisations in Australia that provide commercial property loans to the people. These organizations offer loans according to the commercial mortgage rates and imply interests according to the commercial mortgage interest rates. Apart from the mortgage system, there are other criteria which help a person to get a loan from these organizations. The first and the foremost thing that a person must do is to know the commercial real estate loan rates 2020 and also to decide the right lender. Here is a list of some of the lenders which can help you to get a commercial property loan in Australia.

  • Bigger Banks – The bigger and more established banks will help you to get a loan easily and will have a hassle free procedure of providing loans. These banks are recognized in all countries and are known to all the people which will ensure that the loan you are taking will be effective. Moreover, if you are opting for a commercial mortgage then you will be assured that you will be provided with the best commercial mortgage rates. These banks go through all the documents and update themselves with all the recent rate of interest and provide you with a good amount of money for your business set up. If you choose a big and recognized bank then you will have the best possible LVR for your loan. There are some banks in Australia that provide 65% LVR on your commercial property.
  • Small Banks – Small banks are the ones which are available at national levels and provide you loan according to your property type. In Australia, there are numerous smaller banks like the Bank of Melbourne or the Adelaide Bank that provide commercial property loans. These banks do not provide a huge amount of money like the bigger banks but will provide you with enough money which will satisfy your needs and will help you to set up your business. Moreover, these banks will understand your needs and will help you more as these banks aim on growing themselves and want to upgrade them to international levels.
  • Private Lenders Melbourne – These lenders are not connected to any organisation and provide loans on their behalf. There are numerous private lenders in Melbourne that offer you with commercial property loans. These people know all the rules and regulations and provide you with a loan. Some of them have the benefit of mortgage which allows you to have the best commercial mortgage interest rates for your property.
  • Specialised Lenders – The specialised lender is a term that is totally different from the ones that you know about. These lenders to a more risky business as they are not bound to the official policies that are put up by the banks or any other lenders. They provide the money totally on their responsibility and have different ways to claim that money if you are not able to repay the money in the given time. Some of them do not have any legal help and have to opt for different ways to claim the money provided by them. In some of these sectors, there is also a risk of fraud.

Therefore, from the above information you can understand and know all the money lenders available in Australia. All the lenders have their own terms and conditions and have their own way of providing money for your business. You must know which lender to choose that can help you to grow and set up your business.

How much can I borrow?

Every property displays a purchase price and in case of home loan, an applicant can get up to 90% of a property’s purchase price. However, when it comes to commercial loaning, you will have to have more cash up front that you might need while taking a home loan. 

On a typical small loan of up to $1 million, the maximum you can generally borrow is about 80% of the property’s price.

However, if an applicant has some additional property that can act as a security, the amount can be increased. In case an applicant is taking loan on a single property then the maximum he can borrow is 80%.

It tiers down from there. The higher the loan amount, generally you’d be getting the loan-to-value ratio down below 75%, and then 70% is the maximum most banks are comfortable with, which makes it above $1 million.

Up to 100% or less of the property value using a guarantor to secure your loan. 

Up to 80% of the property value for loans up to $1 million.

Up to 75% of the property value for loans up to $2 million.

70% of the property value for loans up to $5 million.

Loans between $5 million to $50 million are assessed on a case by case basis.

Another variant includes commercial borrowers to have less luxury than a few residential borrowers if they don’t have sufficient deposits. 

“There’s no LMI in commercial lending – it doesn’t exist,”

Let our expert broker get you your right home loan.

Types of commercial property loans

  1. Full Doc : A full documentation or Full Doc loan is the type of loan for a borrower who has access to all the income verification documents that a lender requires. Under this category, a borrower can apply for a Full Doc loan if he agrees on two recent paystubs along with three months personal bank statement. Also, a borrower needs to give two year’s assessed tax returns and three months personal bank statement if he/she is self-employed. 
  2. Low Doc : The second type is for the borrowers who need to provide the minimum or no document at all for procuring a commercial loan. Low Doc loans are generally offered by private funders with a higher rate. The rate is high due to the risk involved. 
  3. No Doc : No doc and Low Doc are likely the same. No Doc loans are also for borrowers who need to provide less or no documents for getting a loan. The process involves no income verification. This type of loans are mostly unregulated. These are based on the resale capacity of the property purchased and the repayment structure. 
  4. Lease Doc : Another category that involves very less documentation is the lease doc. The procedure includes a lender demanding a rent income slip rather than any other income verification. Therefore, these type of loans are also similar to low doc commercial loans. In Australia, you can borrow up to 65% of the property value when you opt for this option. 
  5. Forecasts : Another loan that you can go for is forecasts. The procedure to opt for forecasts includes presenting your profit and loss forecast that displays the loan will enable the business to earn additional income. The additional money that you earn or forecast, will act as a guarantee of repayments. 

The better your profile is, the better funds you can get from any bank. Any bank will lend money to an applicant who has a good credit score and a clean repayment history. 

Types of securities on which you can get commercial loans:

  • Warehouses : To take a leap into the commercial real estate, investors have the benefit if they acquire warehouses. Warehouse loans are quite famous in Australia. If a lender is ready to consider the warehouse loan application, it comes down to strengthening your case. It will also be enough to present plenty of financial evidence in support of a good borrower profile. 
  • Office Buildings : With the most flexible commercial mortgage rates, it is the right time to invest. Lenders are welcoming office loans with wide opportunities to give you a bright future. You will come across some commercial investors who find offices as a safer option when it comes to long term lease. It is the right time for borrowers to expand and buy a property rather than spending so many dollars on paying rents. The following information will help you analyse the amount you can borrow when you have plans to expand. 
  • Shopping Centres : While talking about commercial properties, one of the perfect examples include shopping centres. However, the question arises about how you can get an approval for a loan? You might have noticed that during any economic crisis, shopping centres get the maximum hit. Therefore, many lenders find it risky to lend loans. 
  • Factories : Australia has seen advancements and with the change in working culture, you might not see benefit in acquiring a factory. However, there still are opportunities available for borrowers to get a loan if you have plans to invest in a factory. You will come across various lenders claiming to support you. However, there will only be a few lenders who will be willing to assist you with the right information and procedures. To get a factory loan, make sure you have a strong case with the right lender. 
  • Shops
  • Land Subdivisions : You will come across two popular terms namely ‘land acquisition’ and land development. Whenever you have plans to get a loan for any of the two purposed, it will be under the land subdivision loans. The loans are granted on the basis of your purchase and improvement of the land in Australia. The overall development that you will need to show must include converting the raw loan to a building site. 
  • Residential Property Development Finance : Commercial real estate developers have the opportunity to expand their business with the best lenders in Australia. You can get a construction or project finance in Australia for real estate development projects at a rate which is normally 1-2% higher than any ordinary investment loan. However, the lenders charge lower rates on residential property development finance than typical commercial development loans. You can borrow money based upon the percentage of the GDV (Gross Development Value). Currently, lenders in Australia are offering up to 60% of loan amount on GDV. 
  • Block of Strata units
  • Block of Flats
  • More than three units in the one development

Commercial Property Loans FAQ

What is the minimum amount can I borrow for a Commercial loan?

The minimum property loan depends upon the credibility of the individual or company, the land and the locality where the property is brought. To be precise, property loan is generally 75% of the total market value applicable. There are some other factors like the age, qualification, financial capacity and other criterion that depends on the amount that will ensure the amount of property loan that you can avail.

 What is the interest rate of a commercial loan?

There are different rates of interest provided by different organizations. If you are taking a loan from a bigger bank then you can see that the rate of interest is low as they have low risk factors. On the other hand, if you take loans from the private sector or small banks, you can see that they are having more interest rates as there are more risk factors related to these sectors. There you can consider that all the sectors that are providing property loans have different rates of interest.

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