Looking to buy commercial property? Engaged Finance can help you!

Securing a commercial loan

Investing in commercial property comes with a different set of advantages to investing in residential real estate. Commercial property typically offers a higher rate of return but this is balanced by the potential of longer vacancy periods. Due to these differing circumstances and pressures, commercial property loans are assessed differently to residential loans.

The amount that you can borrow for a commercial property is largely determined by the type of property to be purchased and the purpose of the loan. Purchasing for investment for example, is considered a lower risk to the lender than purchasing property for your own business premises.

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When applying for a commercial loan, lenders will look at:

Your capacity to repay – all of your income including expected rental income from the commercial property.

Your deposit and any available equity.

The type of commercial property – whether it’s a factory, office, warehouse or shop-front and its location, together with a valuer’s report.

Details of the commercial property lease and conditions.

Key differences between commercial and residential properties

If you are unfamiliar with the key differences between commercial and residential properties, we have listed a few key points below.

  • Residential leases typically have a term of 6 to 12 months, while commercial property leases run for longer terms.
  • Commercial properties feature longer vacancy periods and the lessee bears the costs of maintenance, rates and repairs. This means the property owners pocket more of the rent as profit.
  • Buying a commercial property involves paying Goods and Services Tax (GST), which may increase the cost of the property you’re looking to purchase by 10%.
  • In residential properties, the property owner is responsible for these expenses.


How we can help

Whether you’re looking to purchase your next commercial property or would like more information on commercial loans, contact us today.

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Our team will help you search, choose and settle your loan. Chat to one of our loan specialists at a time that suits you.

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