Refinancing a commercial loan

Share your concerns & ideas about commercial property loans in Australia.
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gaaRa
Posts: 55
Joined: Fri Jun 28, 2013 3:35 pm

Refinancing a commercial loan

Post by gaaRa »

Hi there,

I am a self-employed carpenter looking to refinance a $456,000 commercial loan that I had taken out two years ago to buy a property worth $570,000. I have already paid almost $75,000 off it.

I have been offered a better deal by a private lender that I know. They said that they will allow me to refinance if I can provide a ‘ideal’ security for the loan. However, I am not sure if they will accept my property as security. What is an ideal security for a lender in the first place?

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Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Refinancing a commercial loan

Post by Otto Dargan »

Hi and welcome to the forums gaaRa,

As you are refinancing a commercial loan, lenders may not accept your property as security if it is a specialised commercial property. However, they may be willing to accept:
  • Standard commercial properties.
  • Offices or restaurants.
  • Factories or warehouses.
  • Retail premises.
  • High quality rural properties.
It should be noted that non-standard properties, such as pubs and child care centres, may be more difficult to finance. Properties that have a wide appeal, are located in good location, and are zoned as residential, commercial, industrial, or mixed may be considered as standard security by lenders.

Normally, private lenders may be more expensive and are considered the last resort for many borrowers. It is recommended that you approach a mortgage broker with the knowledge of specialist lenders.

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

gaaRa
Posts: 55
Joined: Fri Jun 28, 2013 3:35 pm

Re: Refinancing a commercial loan

Post by gaaRa »

I really appreciate the info, Otto. I will probably have to reconsider applying with a private lender for now. What sort of deal will I be offered if I apply with a normal lender? Any relevant information will be much appreciated.

For your information, I am behind on my repayments by a month or two. I really hope that it will not be a problem.

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

Re: Refinancing a commercial loan

Post by Otto Dargan »

Hi gaaRa,

If your loan is in arrears then you may qualify with a lender to borrow up to:
  • 70% of the commercial property value.
  • A maximum loan size of $5 million.
Please note that lenders may be more inclined towards borrowers who have several defaults than those who are behind with their repayments. One of the reasons for this may be because missed payments on a business loan shows that you are experiencing financial distress.

In spite of this, you may be able to get approved by a lender if you can prove that you have the capacity to make your repayments.

If you want to find out more about refinancing a commercial loan then you can visit our website. You can also reach us on 1300 889 743 or fill in our free assessment form so that one of our mortgage brokers can match you with a suitable lender to refinance your loan.

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

gaaRa
Posts: 55
Joined: Fri Jun 28, 2013 3:35 pm

Re: Refinancing a commercial loan

Post by gaaRa »

Actually, I have heard a lot about your mortgage brokers and their expertise. I would really love it if one of them could help me find a lender who can meet my loan needs. I will give you a call by the end of the week to set up a meeting with one of your brokers.

Thank you so much for your help, Otto. I cannot wait to speak with you directly.

zoecoco
Posts: 54
Joined: Mon Jun 15, 2009 4:40 pm

Re: Refinancing a commercial loan

Post by zoecoco »

Good morning,

Like gaaRa here, I’m also trying to refinance a commercial loan and yes, I do have arrears on my loan. However, I’m mainly concerned about the costs that are attached to refinancing my loan. I’ve heard that they can be expensive. Can you please tell me what these costs are specifically for?

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

Re: Refinancing a commercial loan

Post by Otto Dargan »

Hi zoecoco,

There may be certain administrative and legal costs that you have to pay when looking to refinance a loan. In general, you may have to pay:
  • An upfront borrowing fee.
  • A loan application fee if you apply for a new loan.
  • Exit fees if you pay out a loan early, usually within three to five years.
  • A valuation fee to a professional valuer if your lender requires a re-valuation of your property.
  • A settlement fee to pay out your current mortgage.
  • Discharge fee in order to release you from the mortgage.
  • Break costs. These may apply when you refinance your loan before the fixed period of your loan ends.
  • Standard application fees which may vary amongst different lenders.
  • Certain government or legal fees to register and transfer the property title. This may include stamp duty and mortgage registration fees.
  • Ongoing fees like monthly account keeping fees, annual fees, or fees from redrawing.
  • Lenders Mortgage Insurance (LMI) when you have over 80% of the purchase value owing on your loan refinance.
To know more about the costs attached to refinancing your loan, you can check out our website.

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

zoecoco
Posts: 54
Joined: Mon Jun 15, 2009 4:40 pm

Re: Refinancing a commercial loan

Post by zoecoco »

Thanks for keeping the reply to-the-point. I’ll take a look at your website when I get off from work. I’ll call you directly if I need to discuss more. Goodbye :)

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