Commercial loans are targeted at property developers seeking a loan for a construction project where some, or all properties to be constructed, are to be sold as part of a profit-generating venture.
Lenders generally regard a loan application that proposes any level of repayments from income generated from sales of units to be constructed, as an application for a commercial loan.
Commercial loans usually involve far greater sums of money than either development loans or construction loans. As such, the degree of complexity involved in applying and qualifying for commercial loans is greater.
Due to the inherent higher level of risk faced by lenders, commercial loans also command a higher rate of interest than development or construction loans where income from sales is not a component of repayments.
Obtaining suitable finance for your development project is a time-consuming process that can be challenging and an ordeal of sorts, especially if you plan to construct a large-scale development.
The assistance of an experienced Melbourne Mortgage Broker is recommended if you are in the market for a commercial loan.
See Development Loans if you are an investor seeking a loan to develop rental properties on a single residential title and you intend to retain the new builds as investments.
See Construction Loans if you require finance to build an owner-occupied home on your own land and your building contract requires progress payments to your builder.
What Lenders Require for commercial loans
Commercial lending comes with stringent application requirements imposed by all lenders.
In addition to requiring a comprehensive and professional feasibility study, lenders may require you to have;
1. Experience in building commercial properties,
2. A reasonable level of contingency funds,
3. Evidence of a significant percentage of pre-sales achieved before the commencement of construction,
4. Enough of your own capital invested into the project, and
5. Additional security for commercial loans where they value the completed project differently than you do.
Value added to commercial loans by competent, experienced mortgage brokers
Commercial lending is a highly specialised field and the value that a competent and experienced mortgage broker adds to completing applications for commercial loans should not be under-estimated.
The right mortgage broker knows which lenders to approach, and how to present your loan application in a manner that meets all the chosen lender’s unique lending criteria.
A mortgage broker with the appropriate commercial loans experience can help you to avoid mistakes that can derail your application completely, or cause significant and costly delays in obtaining the required funding.
An appropriately experienced mortgage broker can clearly explain to you the terms and conditions applicable to commercial loans as well as all of the costs that you will incur in the process of obtaining and servicing your commercial loan.
Knowing who to contact and having established credibility through previous interaction with the lending institution’s credit officers, can help a competent mortgage broker, to expedite the resolution of any issues that might arise during your application for a commercial loan.
Partnering with a mortgage broker is a smart move and one that can reduce the level of stress and anxiety that can exist until your commercial loan is in place and you can commence construction.
Why partner with Oz Lend?
Oz Lend is an established player in the Melbourne mortgage broking industry and it has wide experience in all types of lending, including commercial loans.
Oz Lend’s senior credit advisor, Vlad Makutonin, has over 15 years experience in assisting property developers to obtain commercial loans to fund their construction ventures and realise their objectives.
In addition to the major lenders, Oz Lend also provides its clients with access to a range of other lending institutions, to ensure that the right commercial loan on the best terms and conditions is found for you and your construction project.
Call Vlad on 1300 438 669 to discuss your commercial loan needs and get the ball rolling for your next development.