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Know About Commercial Loans

Investing in commercial property comes with a different set of advantages and disadvantages to investing in residential real estate. Commercial properties typically offer a higher rate of return but they can also have longer vacancy periods which can put pressure on investors. As such, commercial property loans are assessed differently to residential home loans.

One of the main differences is that the amount you can borrow is largely determined by the type of property and the purpose of the loan. Purchasing for investment, for example, is considered lower risk than purchasing your own business premises.

Commercial properties as security

Properties used primarily for business purposes and zoned commercial will require a commercial loan to purchase. Acceptable security types include:

  • Shop fronts
  • Offices
  • Industrial units
  • Factories, warehouses or workshops
  • Mixed use, such as shop and residence
  • Multiple residential units in one development
  • Medical suites

Evidence of income

Commercial lending is not covered by the National Consumer Credit Protection Act (NCCP). Consequently, there are fewer regulations around verifying a commercial borrower’s income than a residential borrower’s income. Of course, you will still need to show that you can afford your regular loan repayments.

We specialise in low document and lease document commercial loans. Evidence of income we would require for these two types of loans includes but is not limited to:

  • Low doc: a declaration of your annual income, a letter from your accountant, bank statements and/or BAS statements.
  • Lease doc: proof that rental income from the investment lease is more than the interest repayments.

General security agreements (GSA)

Be aware that some lenders will require you to enter into a general security agreement (GSA) when you apply for a commercial loan. GSAs replaced fixed and floating charges and debentures in 2009, and function to mitigate the lender’s risk, giving them security over all the borrower’s assets. Our commercial loans only take the commercial property as security and we do not require the borrower to sign a GSA.

Annual reviews

Many lenders require borrowers to undergo annual financial reviews to ensure they can continue to repay their loan. In some cases, the security property is also revalued on an annual basis. Make sure you have a good understanding of your terms and conditions before entering into a commercial loan as poor security revaluation could result in your lender increasing the margin on your loan.

Many of our commercial loans are set and forget, with no annual reviews or revaluations required. We always recommend you seek independent financial advice prior to making any decisions relating to your financial future.

If you’d like to find out more about applying for a commercial property loan, speak to one of the expert lending specialists at Opulent Finance today!

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Siraj Ahmed
Siraj Ahmed
2020-11-18
Trustindex verifies that the original source of the review is Google.
Excellent service. Got us a great loan option and also worked with the bank to get the loan approved during the heights of COVID.
Malaka Ekanayake
Malaka Ekanayake
2020-11-10
Trustindex verifies that the original source of the review is Google.
We have had a very pleasant experience working with Opulent Finance. We did not have that much experience with house loans as we were first home buyers but working with Opulent  Finance team specially with Ishara, made that experience stress free one. She helped us secure an incredibly competitive interest rate and offered her guidance so we can take advantage of the future interest rate drop. Thank you Ishara, Dayan and team for your incredible support and we have no hesitation what so ever in recommending Opulent Finance for your financial needs
Uma Gunaratne
Uma Gunaratne
2020-11-04
Trustindex verifies that the original source of the review is Google.
Ishara is highly knowledgeable and if you are a first home buyer and new to the intricacies of all that home loans entail, she will really take you under her wing and impart her knowledge and experience and treat you as one of her own. She is also extremely patient but will also be very truthful and upfront in situations which is honestly what you need. She did a very complicated loan for us, and was so incredible efficient and organised with all the paperwork that was required. Not only that, she helped us secure an incredibly competitive interest rate! Ishara has probably spent hours and hours explaining to me details and giving me really good guidance through this momentous period in life! During the cooling off period and settlement, she was constantly chasing up our loan and honestly took a personal interest in the outcome. Our solicitor was also very happy about working with Ishara as she was following the entire process, was always up to date and very easy to work with. Considering that our entire process happened during the covid-19 lock-down and work from home environment, we have nothing but good things to say about how professional Ishara was as she didn't let a single thing slip. We are so glad that we have both Ishara and Dayan in our corner. We will definitely be using them for all future financing needs. Thank you Ishara, Dayan and team!
Harsha Ill
Harsha Ill
2020-10-11
Trustindex verifies that the original source of the review is Google.
Opulent Finance gave professional advice for my unique home loan requirement. They respond quickly with the proper information. The process was smooth and I felt comfortable to deal with the team. The team is friendly and professional to deal with. Highly recommended for any one looking for finance.
S P
S P
2020-09-22
Trustindex verifies that the original source of the review is Google.
I have been dealing with Ishara at Opulent Finance for over 6 months now and she has been faultless. She has helped me secure a loan pre-approval in no time and assisted me with my property purchases. I could not recommend Ishara highly enough.
Afshin Koohestani
Afshin Koohestani
2020-09-22
Trustindex verifies that the original source of the review is Google.
Good service and offers.
Janaka Kumara
Janaka Kumara
2020-08-22
Trustindex verifies that the original source of the review is Google.
A big shout out to Dayan and his team for the seamless service provided during the refinancing process. Thoroughly professional team that pays attention to every detail and has been extremely transparent throughout the process. A team that always has the best interest of clients in mind and makes all efforts to provide the right advise and outcomes to the clients. Highly recommended!
Rakesh Mistry
Rakesh Mistry
2020-08-19
Trustindex verifies that the original source of the review is Google.
They called me back with solution