need a loan to buy a property with a shop front in WA

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pine
Posts: 48
Joined: Mon Jun 15, 2009 4:01 pm

need a loan to buy a property with a shop front in WA

Post by pine »

Hiya!
There’s a place in WA that I’ve set my eye on- it’s a building with two shop fronts and a residential house attached to the back. The real estate website says that its only $535,000 too which I think I can afford – I only need to borrow around $350,000 anyway.

I called up the agent and spoke briefly with him but the next day I was talking about it with a friend who works in the banking sector. I was reading him the description, and then he tells me that I might have to get a commercial loan which is more expensive!

I don’t need to invest in that property itself but I’ve spent a lot of time researching it and I think it would be a good deal for me, but a commercial doesn’t sound too attractive. Can you please confirm this for me?

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Otto Dargan
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Re: need a loan to buy a property with a shop front in WA

Post by Otto Dargan »

Hi pine,

A property with a shop front with a residence attached to it is one type of mixed use property, which is basically a real estate that has been zoned for more than one type of use. Other examples include houses that have been used as office, retail showrooms or converted warehouses.

As your friend mentioned, loans to buy mixed purpose properties are usually processed under commercial loans however some of our lenders can let you buy it with a residential home loan as well. Compared to commercial loans, residential loans have lower interest rates, fees and allow you to loan for a longer period.

According to the purpose of the property, the loan amount you can borrow will vary:
  • Using it as a home – You can borrow up to 90% of the property value if you meet the conditions
  • Renting out the residence – You can borrow up to 80% with a commercial loan
  • Living in the residence – You can borrow up to 75% with a special commercial loan
  • You want to use it for your own business – You can borrow up to 75% however this will depend on how profitable your business is
For which of these purposes are investing in the property for?

Cheers,
Otto
Otto Dargan
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ninjazombie
Posts: 43
Joined: Fri Jan 11, 2013 9:44 am

Re: need a loan to buy a property with a shop front in WA

Post by ninjazombie »

Hi, I was thinking of renting out the residential part and combining the two shop fronts. I already run a medium-sized flower and gift store so I wanted to expand my business to that location as well.

I’m not too sure about the residence anyway since I just might live in it, depending on how the business goes. What do you think my chances are?

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Otto Dargan
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Re: need a loan to buy a property with a shop front in WA

Post by Otto Dargan »

pine, I cannot comment directly about your chances to get approved since I do not know your personal and financial details. If you would like a proper assessment of your home loan application, do give us a call on 1300 889 743 to speak to one of our expert mortgage brokers or send us an online enquiry.

In any case since you are running your own business you will have to provide your business’ financial statements and show proof that it is doing well.

Usually you will need to show your tax returns from the last two years to verify your income unless you have been in business for a shorter period of time. However it will be harder to get your loan approved if your business is less than two years old or even less than one year old.

On the whole most lenders find self employed borrowers to be more risky since they think that their income is more unstable. Therefore the better and stronger your financials are, the more likely it is that you can get approved for your loan.

Cheers,
Otto
Otto Dargan
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pine
Posts: 48
Joined: Mon Jun 15, 2009 4:01 pm

Re: need a loan to buy a property with a shop front in WA

Post by pine »

Wow, I guess the odds are stacked up against us self employed people! Hope my business is “profitable” enough for the banks, haha

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Otto Dargan
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Re: need a loan to buy a property with a shop front in WA

Post by Otto Dargan »

Hi pine,

Even though it may seem that way to you, many self employed borrowers get their home loans approved without much difficulty. The key is knowing which lender to apply to and making sure that you can provide the relevant documents to convince them.

Do give us a call on 1300 889 743 or enquire online if you ever need help with your home loan.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

willynilly
Posts: 47
Joined: Wed Jul 24, 2013 2:06 pm

Re: need a loan to buy a property with a shop front in WA

Post by willynilly »

Hey guys, I’m posting my problem here because I want to buy a property in WA too which is where my problem starts – the property is in a remote area so when I spoke to my banker about the loan, he said that I could not borrow as much as I had wanted to because it was not in their policy.. it was quite off-putting so I haven’t spoken to him after that, since I spent so much time finding the right place!

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Otto Dargan
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Re: need a loan to buy a property with a shop front in WA

Post by Otto Dargan »

willynilly,

The problem is that properties in remote or less populated areas tend not to sell well, which makes lenders uneasy about the potential of the property.

However, not all lenders are the same, some prefer to take more risks and some don’t – in fact, we have one lender who will allow any property less than 50 hectares no matter where it is located (to a certain extent).

In any case, most lenders maintain a postcode list according to which they offer loan products to customers.

An easy way to see how our lenders will classify your location is to use our Postcode Location Guide. Just enter your postcode and choose between a normal loan and a low doc loan it will tell you what the restrictions on your property are according to its location.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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