Commercial Loan | Know the Basics

What is a commercial loan?

A commercial loan is a loan used to finance the growth of a business in a commercial property.

It can be used to fund the acquisition or renovation of the following

  • office spaces
  • an entire office building
  • warehouses
  • showrooms
  • manufacturing factories

What should I know about commercial loans?

First, you must know that a commercial loan is different from a home loan. While used interchangeably, note that a commercial loan is granted to a business entity for business purposes only.

Because of this, banks and lending institutions have stricter criteria for granting commercial loans. The application process can also be more lengthy and complex.

What should I know about commercial loans?

Loan to value ratio. The typical maximum loan to value ratio of a commercial loan is 65 per cent. This means that you have to shoulder 35 per cent of the property price.

Interest rates. More often than not, banks charge higher interest rates on commercial loans compared to residential loans. The actual rate will reflect the financial capacity of your business and the risk involved.

Term of the loan. Commercial property loans are long-term in nature. You can find mortgages that last for 10 or 15 years.

Repayments. How much you would be paying depends on two factors: the amount of your deposit and the length of the mortgage.

If you want to pay smaller amounts, you should make a bigger down payment or negotiate for a longer loan term. Repayments can be weekly, monthly, or quarterly, depending on your arrangements with the lender.

Interest-only repayments. Some commercial mortgage loans allow you to pay only the interests during the first few years of the loan. This can keep your costs down and maximise cash flow.

Fees. You need to be aware of the usual expenses associated with getting a mortgage. 

Why use us for your commercial loans?

Our experience has taught how to simplify the application process.

  • We know what documents you really need. No need to stress over the repetitive task of submitting requirements to different lenders.
  • Depending on your funding needs and ideal mortgage type, we will shop around to help you find the best commercial loans.
  • We can help you even if your bank says no. There are many credible lending institutions that are willing to step in and help.
  • We are always available for consultations. It is our duty to remind you of potential risks and guide you towards making smart mortgage choices.

Contact us and find out how we can help you with your commercial loan requirement.

OneLife Financial also offers insurance services such as total and permanent disability (TPD) insurance.

Contact us today

Scroll to Top