Do I really need one?
Buying commercial real estate for investment or to purchase your business premises takes a lot of work and planning and that doesn’t even factor in trying to get finance.
Commercial lending policies aren’t as black and white as they are in residential lending so it pays to have an experienced commercial mortgage broker on your team.
What are the benefits and what should you look for in a commercial broker?
What makes commercial loans different to home loans?
Unlike a home loan to buy a residential property, commercial loans aren’t governed by the National Consumer Credit Protection Act 2001 (NCCP Act).
That’s actually a good thing for you in that lenders can be more flexible with lending policy.
The trick is trying to figure out what the bank wants to see in an application and trying to get a fair deal.
By going to a bank directly, many borrowers lose out:
- If you are in a difficult situation, then the bank will use it as an excuse to overcharge you.
- If you don’t know what competitors can offer, they’ll charge as much as they can.
- If you’re a loyal customer with many accounts, they think you’ll be far less likely to leave so they’ll charge you more!
An experienced commercial mortgage broker can help!
What do commercial mortgage brokers do?
They will firstly sit down with you and work out what you’re trying to achieve.
If you’re PAYG, you’ll usually need to provide your most recent payslip and a group certificate.
If you’re self-employed, the broker will need to see your last 2-3 years business and personal financials including tax returns and business activity statements (BAS). Luckily, there are low doc solutions available.
Once all of this information has been provided, the broker can go about looking for a lender that will approve your loan.
Where a great commercial mortgage broker really stands out is in their skills to negotiate for a competitive loan term and interest rate.
After this, the broker will provide you with an Indicative Funding Proposal (IFP) to confirm the likely terms of the loan.
If you’re happy with the proposal, the broker will arrange for a valuation and submit your mortgage application for approval.
During the process, they will work with your solicitor and accountant and even liaise with your buyers agent (if you’re using one) to give you a smooth application process that is in your best financial interests.
What are the benefits of a commercial broker?
We can speak your language
We understand your goals in buying a commercial property, whether you’re after a strong rental return or your strategy is capital gains. We even deal with business owners looking to buy their own premises.
We can’t advise on where and when to buy property but we can help you to achieve your goals.
We don’t work for the bank
Some commercial mortgage brokers do works for banks but we don’t!
We can compare many different lending options from a number of different major banks and second-tier lenders.
We regularly find that Australia’s non-banks are more competitive than the major banks when it comes to pricing and accepting unusual commercial properties (security types).
We will negotiate your interest rate and LVR
You should expect to pay an interest rate premium for a commercial property loan but it’s important to understand that the rate and the amount you can borrow (your Loan to Value Ratio) aren’t set in stone. In fact, banks don’t even advertise their rates to the public!
It comes down to an experienced commercial mortgage broker with the credit skills and relationships with the business development managers at the bank to get you a great deal.
We’re experts in credit
That’s so much cheaper than commercial rates and you can even get longer loan terms!
It all depends on the lender and how we’re able to package the deal.
We can provide a smooth application process
We’re with you from application to settlement and beyond.
That means less stress for you so you can focus on continuing to look at other investment opportunities or, better yet, focus on your business.
A commercial broker is with you for life
High-end investing requires a commercial mortgage broker that can commit to you for the long haul.
They will play an integral part in your professional team along with your accountant, commercial buyers agent and your solicitor.
In that way, you can focus on living your life and getting on with business while the broker focuses on keeping your loan competitive.
What should I look for in a broker?
The first thing you should look for is credibility.
As a minimum, they should have a Certificate IV in Finance and Mortgage Broking.
They should also be an active member of the Mortgage and Finance Association of Australia (MFAA) or the Finance Broker Association of Australia (FBAA).
Secondly, you’ll want to know what their experience is.
Check out their LinkedIn profile and do some research on the property you’re looking at buying and make sure they understand what they’re talking about.
If they have a Facebook page, check out what the reviews and comments say – they can’t delete this.
Any other tertiary qualifications or specialist training they have in commercial broking can also give you more confidence in your decision.
Finally, look for a commercial mortgage broker that is “accredited” or is able to write loans with a wide range of major banks, second-tier lenders and customer-owned banks like credit unions and building societies.
More choice in lenders means that you have a better chance of getting approved for a well-priced loan that suits your needs.
How much do they cost?
Some mortgage brokers will charge you a fee no matter whether you’re buying a commercial or a residential property.
We don’t charge a brokerage fee if you’re borrowing more than $200,000 and you plan to keep the mortgage for at least two years.
However, we will usually charge a brokerage fee for complex or unusual situations and commercial properties fall under this category.
There is no set fee that you will be charged: it’s at the discretion of the broker and the nature of your situation.
The reason why a brokerage fee may be charged is purely because of the time it can take to find a suitable lender from our panel and negotiate a strong deal on your behalf.
Unlike a residential home loan, the broker isn’t trying to fit you into the bank’s lending policy. They’re trying to convince the bank to even consider your application in the first place!
Do you need a commercial property loan?
Please call us on 1300 889 743 or fill in our online enquiry form to speak to a specialist commercial mortgage broker today.