How much can I borrow for a commercial property?

Share your concerns & ideas about commercial property loans in Australia.
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twoba
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Joined: Mon Jun 15, 2009 12:11 pm

How much can I borrow for a commercial property?

Post by twoba »

Good morning everyone.

I want to buy a commercial property but I won’t be able to do so with my money alone. I want to take out a mortgage to help finance the purchase of the property. My friends suggested me to learn about this in this forum so here I am. How much might I be able to borrow for a commercial property?

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Otto Dargan
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Re: How much can I borrow for a commercial property?

Post by Otto Dargan »

Hello twoba, welcome to the forums.

Australian lenders as well as commercial lenders tend to have their own risk profiles and maximum loan amounts on commercial property loans.

If you take out a commercial property loan then you may be able to borrow up to:
  • 80% of the property value for loans up to $1 million.
  • 75% of the property value for loans up to $2 million.
  • 70% of the property value for loans up to $5 million
If you are taking out a loan anywhere from $5 million to $50 million then your application may only be considered on a case by case basis.

It should be noted that other factors aside from the lender may also determine the amount that you may be able to borrow. This may include the type of loan as well as the nature of your security:
  • If a residential property is used as security then you may be able to borrow 100% of its value.
  • If you are taking out a lease doc, low doc, or a no doc loan then you may require a larger deposit.
  • If you are buying a specialised security property then you may require a larger deposit.
Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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twoba
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Joined: Mon Jun 15, 2009 12:11 pm

Re: How much can I borrow for a commercial property?

Post by twoba »

The property that I want to purchase is a bit under $1 million so that means I should be able to borrow at least 80%. That’s good enough for me, but I heard that the banks may also take my loan purpose into consideration when assessing my loan application. What does that mean?

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Otto Dargan
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Re: How much can I borrow for a commercial property?

Post by Otto Dargan »

Hi twoba,

The NCCP Act regulates all loans that are used for business or investment purposes, with the exception of residential investment properties . This means that the protection that home buyers have may not extend to most commercial borrowers.

Lenders will take the purpose of your loan into consideration when they assess your loan application:
  • Investment (low risk) - This is when you are taking out the loan to buy or refinance a commercial property that will be leased.
  • Owner occupied (medium risk) - This is when you are taking out the loan to buy or refinance a commercial property that is leased to or occupied by your own business.
  • Working capital (high risk) - If you are financing the day to day operations of your business or liquidity shortfalls then it may be considered high risk by most lenders.
  • Other purposes - The lenders may consider all other commercial, business, or investment purposes on a case by case basis.
Please note that the property that your loan is secured on determines what your loan is used for and not the purpose of your loan. Some commercial lenders may not approve your application if you are using a commercial property as security for a loan that is not used for business or investment purposes. This is because the loan would be regulated under the NCCP Act.

If you want to learn more about any of this then you can have a look at our website. If you want to discuss things directly with one of our experts then you can call us on 1300 889 743 or enquire online.

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

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twoba
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Joined: Mon Jun 15, 2009 12:11 pm

Re: How much can I borrow for a commercial property?

Post by twoba »

That seems reasonable I guess. Thanks for being so helpful, Otto. I’ll enquire online for now and give you a call by the end of the week.

dickensfan
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Joined: Thu Jul 04, 2013 4:46 pm

Re: How much can I borrow for a commercial property?

Post by dickensfan »

Hello. I can’t provide my tax returns so I’m thinking of getting a low doc loan to buy a commercial property. Does anyone know anything about the documents that I may need to provide in order to get my application approved?

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Otto Dargan
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Re: How much can I borrow for a commercial property?

Post by Otto Dargan »

Hi dickensfan,

A low doc commercial loan is specifically designed for self employed borrowers who are not able to provide full financials such as tax returns or financial statements. In most cases, you may need to have a registered ABN and sign an income declaration which confirms your current income.

You may also need to provide additional documents such as:
  • BAS statements.
  • Bank account statements.
  • An accountant’s letter.
  • A copy of the commercial lease agreement or your rental history.
However, you may not be required to provide any additional documents in some cases. If you want to know more about this then you can have a look at our website or call our office.

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

dickensfan
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Joined: Thu Jul 04, 2013 4:46 pm

Re: How much can I borrow for a commercial property?

Post by dickensfan »

That seems logical. Thanks, Otto. I took a look at your website and found out a lot. I’ll call you by the end of this month to discuss my situation and loan needs. Talk to you soon.

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