Important Things You Must Know Before Getting A Commercial Mortgage

Commercial loans are different from a residential house loan. The lending policies and price for such property loans are not fixed. There is a possibility for negotiation. So, how to find the best lender for your purchase commercial or renovation of a commercial property? It is advised to talk to a reputed specialist in commercial loans.

Things that impact the amount that you borrow for taking commercial loan

There are several different things that determine the commercial loan amount that you will need to borrow. The first thing is the kind of commercial property loan. Second is the nature of security. If you are using a residential property as a security, then you may need to borrow full 100% of the value.

No documents loans, lease documents loans, no document loans and low document loans will need a larger security deposit. Also, properties that have specialized security measures built into them will need a larger deposit.There are several reasons you need legal advice to secure a commercial mortgage.

What type of securities is most suited to sanction a commercial property loan?

Different kinds of securities pose varying types of risks to banking institutions. To grant a commercial property loan, standard commercial estates are the best type of security.

Such types of security include offices, factories, warehouses that includes storage units and showrooms, retail space, shop fronts, residential units (house, block of units, townhouse or unit).

The property that you are keeping as security should be located in a decent location. It should also be categorized as commercial, residential, mixed and industrial.

Types of properties that is risky for lender to keep as a security

Specialized commercial properties are not just hard to value but also to sell. These properties pose a high risk to the lending firm. These are accommodation that includes motel, backpacker, resorts, hotel, breakfast, bed and caravan parks.

Other places being aged care centers, car yards, child care or preschools, farms or rural properties, function or reception centers, land subdivisions, petrol stations, Commercial or residential property developments, pubs, taverns or hotels, restaurants, vineyards, landfill, waste management facility, garbage dump, and supermarkets.

Some other properties that lender view specialized are specific types of private schools, recreation centers, shopping villages or centers. These specialized properties need a comprehensive risk assessment and valuation from the bank. You will be needed to get a sizeable deposit in order to get the loan approved.

Features of a commercial property loan

Commercial property loan comes with a wide range of features such as full documentation for individuals, firms, superannuation funds (that are self-managed) and trusts. It should have a term of around fifteen years on application or thirty years for housing security.

Such loans should be charged with a variable or fixed interest for only five years. Any type of additional repayments is permitted on variable loans. Offset accounts are not available under this loan.


All the above information will definitely prove to be helpful to you at the time of taking a commercial mortgage.

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