Commercial Property Loan @globalcapital.com.au

1. Commercial Property Loan @globalcapital.com.au When you invest in commercial property, you usually need to take out a mortgage to pay for it, much like buying a house. However, the factors that determine whether you qualify for an investment property loan are slightly different and the requirements are more demanding. Commercial mortgage lenders will take a variety of financial considerations into account, including property appraisals, credit checks, prepayments, and debt coverage ratios. A real estate valuation is required to determine the market value of a commercial building and adjoining property. The valuation protects the lender from accidentally lending you more money than the property costs, thereby reducing the risk of loss for the lender. Estimates are also made when buying a house, but the factors that determine the price are different. The value of commercial property depends not only on the condition of the roof, sanitary facilities and other facilities, but also on the size, location and accessibility of the premises. For an investment property mortgage loan, you must also have good credit. Of course, good credit is a plus for a mortgage loan, but because commercial real estate tends to be more expensive than residential real estate, credit terms tend to be more stringent. In addition, when reviewing your credit history and score, lenders will ask for multiple income and asset documents to ensure you can make your mortgage payments. If your own company will occupy a place of business, the lender will ask for proof of the viability of your company. The upfront payment is another determining factor in whether you will be approved for a commercial property loan. In the housing industry, borrowers often get very little down payment and sometimes nothing in the form of a down payment. However, the high prices for office and commercial real estate make lenders very cautious because the risks are much greater.

2. Mortgage loans for investment properties usually require a large down payment of at least 20 percent of the price. However, in most cases, the average appears to be 30 to 45 percent up front. You will then receive a loan of the remainder of the purchase price. The amount you get for a loan compared to the actual price is called the Loan-to-Value Ratio (LTV) and is a very commonly used percentage in the mortgage world. Finally, you will be approved for a mortgage based on the Debt Service Coverage Ratio (DSCR) of the commercial property loan. This is the amount of money the property makes each month from rent and other expenses (net cash flow) relative to the amount of monthly mortgage payments (debt service). This ratio helps lenders determine how smart you can afford to pay off your commercial real estate loan each month. The ratio between 1.1 and 1.4 is preferably maintained. A factor of 1.4 means that for every dollar you pay in mortgage payments, your property should make $1.40. Therefore, your income will be greater than your debt, and you can theoretically repay your loan. Some commercial lenders may have additional credit terms not listed here, but the basics remain the same for all of them. Be sure to shop around and ask each lender how he or she determines your approval. You can compete in the commercial real estate loan market by doing your homework and coming to the negotiating table fully prepared. For more information about Mortgage Investment visit GCC. Come Visit Us: Level 43 Governor Phillip Tower 1 Farrer Place, Sydney NSW Australia 2000