We are only accepting applications for commercial property loans with a minimum loan size of $500,000, and a minimum deposit of 30%. We apologise for the inconvenience.
You may not know this but commercial loan terms are highly negotiable depending on the strength of your application.
Loan terms vary depending on whether the loan is for a standard or purpose-built (specialised) commercial property.
However, there ways to get a longer loan term, free up your cash flow and increase your borrowing power for future business growth or to continue building your commercial real estate portfolio.
Commercial loan terms up to 30 years?
What loan terms are available?
Yes, it’s possible to get it depending on the purpose of the loan and the property used as a security. Here is a breakdown of the commercial loan terms available with our lenders:
- Commercial property with residential property as security: 30 year terms available.
- Interest only: Up to 5 years
- Standard commercial property (freehold): 10, 15, 20 and 25 year terms.
- Property and business (freehold going concern): 10, 15, 20 and 25 year terms.
- Purpose-built commercial property: Typically 10 to 15 years but some lenders offer up to 25 years as standard policy.
- Interest rate terms: Fixed, variable split rates available.
- Bank bill swap rates (BBSY): 10, 15, 20 and 25 year terms.
- Redraw: Allowed for amounts you’ve prepaid and only after the fixed period.
- Extra repayments: Unlimited and no fees applied after the fixed period.
- Banks will usually insist on principal and interest (P&I) for commercial loans under $ 1 million.
Call us on 1300 889 743 or complete our free assessment form so one of our mortgage brokers can qualify you with a lender that can offer you the best loan term based on your situation.
How can I get a longer term?
There are two ways to get a long commercial loan term:
- Buying a standard commercial property.
- Using a residential property as security.
With that, you can get a loan term of up to 30 years.
What if I’m borrowing at a high LVR?
Even if your Loan to Value Ratio (LVR) is high, you may still qualify for a 30 year loan term.
What if I don’t have a residential property?
Some lenders will still offer 25 year terms with an interest only period!
Will I get charged a higher interest rate?
No! You won’t be charged a higher interest rate for a loan term longer 10 or 15 years.
Why is a longer term better than a shorter term?
It may make more sense to get the shortest loan term possible so you can pay off the loan as quickly as you can but you’re also tying up your cash flow in the process.
Let’s say that you want to buy a freehold going concern so you can eventually have a commercial property as an asset.
The popular choice among commercial investors and business owners is to keep refinancing to an interest only throughout the term of the loan until the mortgage is paid off.
At that point, you can draw less money from the business because you don’t have a mortgage and you can start paying off the asset.
It essentially becomes a nest egg for the future because you can leverage the equity for future business expansion.
Not running a business?
Even you’re just buying a freehold property, getting a longer loan term increases your borrowing power so you can continue to qualify for commercial finance and buy more properties.
That’s because your fortnightly or monthly repayments are essentially smaller meaning you have less commitment and more cash flow to meet the bank’s serviceability requirements.
What are the benefits of a short term loan?
The benefits of a 10 to 15 year commercial loan term is that you’re obviously paying down the loan faster, allowing you to access more equity for investment and to refinance to a lower interest rate more often.
Of course, your monthly commitments are higher so your cash flow is tied in the commercial mortgage.
Case study
Let’s just say you want to buy commercial office space as an investment.
Your monthly repayment on a 15 year term might be $17,000. If the loan term was over 25 years, your repayments might be as low as $11,000 per month.
That gives you around $6,000 worth of cash flow to boost your borrowing power to get a business loan or equipment finance for your business or if you simply have plans to expand your commercial investment portfolio.
Interest only periods for 5 years are pretty common with banks so what you should be really thinking about is after the interest only period.
Are you going to have 10 years or 20 years to pay off the commercial loan?
Complete our free assessment form to speak with one of our mortgage brokers.
We can properly assess your situation to find a loan term that best meets your needs and will help you achieve your financial goals.
