Getting a commercial loan despite bad credit

Share your concerns & ideas about commercial property loans in Australia.
Post Reply
Emily Watson
Posts: 45
Joined: Tue Jul 02, 2013 6:46 pm

Getting a commercial loan despite bad credit

Post by Emily Watson »

Hi there,

It’s almost been a year since I’ve started baking. After months of considering the idea, I’ve finally decided that I want to start my own bakery. I want to buy a commercial property in my area which is roughly worth around $520 - $600K.

I’ve had some issues with my credit history in the past but I’m free of debt at the moment. My main concern is that my credit history may pose an issue. Any thoughts on this?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Getting a commercial loan despite bad credit

Post by Otto Dargan »

Hi and welcome to the forums Emily Watson,

If you are looking to buy a commercial property despite a bad credit history then you may consider approaching a specialist lender who can understand your situation.

Normally, lenders assess your loan application on the basis of certain qualifying criteria, such as:
  • Defaults:
    Your loan approval may depend on the types of defaults that you have, how old they are, if they are paid, and the total number and value of the defaults.
  • Judgements or court writs:
    You may be able to qualify with a non-conforming lender under specific criteria to borrow up to 90% of the property value.
  • Liquidation:
    You may be able to qualify with a specialist lender who may consider your situation.
  • Bankruptcy:
    You may be able to borrow up to 90% of the property value if you are discharged from bankruptcy.
  • Part IX:
    You may qualify to borrow up to 90% of the property value if you have around 16% of the property price as a deposit and have already completed your Part IX agreement.
Which criteria do you fall under?

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

Emily Watson
Posts: 45
Joined: Tue Jul 02, 2013 6:46 pm

Re: Getting a commercial loan despite bad credit

Post by Emily Watson »

I had issues with defaults in the past mainly due to personal reasons. I’m still trying to pay them off. Sorry as I was a little embarrassed to mention about this before. I wasn’t sure if sharing too much personal info on this forum was a good idea.

Is there a way I can improve my chances of getting a loan?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Getting a commercial loan despite bad credit

Post by Otto Dargan »

Hi Emily Watson,

If you’re applying with defaults on your credit file then your situation may determine whether you get approved. However, despite your defaults, you may be able to increase your chances of approval if you:
  • Provide a default explanation letter.
  • Provide good evidence to back up your explanation of the cause of your defaults.
  • Provide a significant deposit. You can do this by saving at least 5% of the purchase price.
  • Pay any unpaid defaults and get them marked as paid on your credit file before you apply for a loan.
It is recommended that you apply with a lender that may consider borrowers with defaults.

To find out more about commercial loans with bad credit, you can have a look at our website. You can also discuss your situation with one of our mortgage brokers directly on 1300 889 743 or fill in our free assessment form.

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

Emily Watson
Posts: 45
Joined: Tue Jul 02, 2013 6:46 pm

Re: Getting a commercial loan despite bad credit

Post by Emily Watson »

Thanks a bunch for your help, Otto. I really hope you guys can help me with this. I’ll definitely give you a call after I have a look at your website. Have a good day.

ichigomochi
Posts: 50
Joined: Wed Jun 24, 2009 4:06 pm

Re: Getting a commercial loan despite bad credit

Post by ichigomochi »

Hi there,

For me, I had to declare bankruptcy a few years back because of an unfortunate incident involving my company. However, that is all in the past and the bankruptcy has already been discharged.

I just want to know how the discharged bankruptcy will influence the interest rate when I apply for a loan?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Getting a commercial loan despite bad credit

Post by Otto Dargan »

Hi ichigomochi,

Normally, you may have to pay a higher interest rate if you have discharged bankruptcy. However, if you are in a strong financial position then a select few lenders may offer normal rates.

Discounted rates may also be available if you:
  • Are borrowing no more than 80% of the property value.
  • Have enough evidence to prove that the bankruptcy was an isolated event and that you were not at fault.
  • Have been discharged for a particular period, e.g. one year, as per the requirement of the lender.
If you want to know more about discharged bankruptcy then you can check out our website.

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

ichigomochi
Posts: 50
Joined: Wed Jun 24, 2009 4:06 pm

Re: Getting a commercial loan despite bad credit

Post by ichigomochi »

That’s great to hear. I’m only looking to borrow about 75% of the property price and the bankruptcy was discharged over a year ago.

Also, after checking out your website, I think I’d be more than happy to get help from your experts since they look so awesome :D I’ll give you a call next week to schedule a meeting with one of your mortgage brokers. Thank you so much for your time. Take care.

Post Reply