Commercial Property Loan
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How Do You Get A Commercial Property Loan In New Zealand?
Commercial property loans are the main tool for the entrepreneur to fund a new venture. This may sound daunting, but you don’t need to be a mogul to be a commercial property investor. Further, commercial property doesn’t need to be a large commercial business venture like a small retail mall or large big box retail chain. It could be as simple as a bed and breakfast or a parking garage. It could also be a new development, like subdividing your land to construct a design-build home to sell.
Commercial properties are dealt differently than your personal home and therefore the loan structures and commitments are different as well. You will see different interest rates and different repayment terms. These are standard but there are areas with lots of room for negotiation. Most of it depends on the collateral or lack thereof for the initial loan. When you are ready to start the process of initiating a commercial loan you need to reach out to your commercial property mortgage broker to find out what financing terms you could get depending on your business type and financial history.
What is a Commercial Property Loan?
A commercial property loan is something that your commercial property mortgage broker can help you obtain when you are looking to acquire real estate or improve real estate for the purposes of a business. This means that it won’t be used as your primary residence. You will need to consult with your local council for all permitting needs for the property if subdividing or rezoning is necessary. So, the main difference is the purpose of the land. However, that makes all the difference in the world.
Often a commercial property loan is offered not just by a bank but also by non-bank lenders or private equity groups. These private equity groups help fund large scale investment projects like shopping malls, airports, and multi million-dollar commercial buildings. The New Zealand based Omega Capital funds projects anywhere from $200K to $20 Million.There are lots of different sized capital investment firms. These capital groups aren’t a good fit for most smaller scale commercial property acquisitions. Further, a personal loan may also cover for a commercial property loan. These aren’t the best option either. If you really want to know how you can pull equity out of your current assets, you need to talk with someone who can advise you and offer you the right financial product for the right project based on your financial situation.
Otherwise, a commercial property mortgage broker will be able to source the right financial product for your venture that uses personal security to back the loan. This could be your home, another investment property, or the commercial property itself, if it will be improved and grow in value. An investment in real estate can be one of the best investments you can make in your future. This is a serious proposition and needs professional commercial loan advise. Hunting through search engine results won’t get you the answer you need.
Are They Different from a Home Loan?
Yes, a home loan and a commercial property loan can be different. However, they can originate from the same security depending on your specific situations. Depending on the financing group the loan could be set up in a number of ways. First, you could get a personal unsecured loan for a low amount. This is the type of situation where your credit might be bad, the property might be worthless, or you may have extensive outside debt. Second, youYou could get a secured loan on the commercial property. If you are looking to buy land for a subdivision, the loan can attach directly to the property for the commercial buildings. This land would be of a certain value and the bank would appraise that value based on engineering plans and recent sales of similar commercial properties. Third, you could just get a home equity loan. If your home has significant equity already stored in it. You could get a home equity loan to tap that unused value. That loan would be secured against your personal loan, but the funds would be used in the commercial property investment. Through ASB of New Zealand, Yyou could even get a revolving credit line secured by the equity in your home. You should speak to your commercial property mortgage broker for more detailed information on what options are open to you and what you best strategy is for obtaining a loan with the best terms.
Here are some primary terms that you will need to consider before signing onto a commercial property loan. ANZ of New Zealand provides one type of product that starts at $20K, but it might not be right for everyone.
- Loan Approval Fees
- Switching Fees
- Loan Top-Up Fee
- Interest Only Repayments
- Lump-sum Repayments
- Loan Term
- Minimum Loan Amount
- Maximum Loan Amount
What Type of Project are you starting?
It all depends on what project you are looking to create. Do you own the land already? Do you need to buy the land? Will it need to be improved or built on? What about subdividing? Does it require improved utilities like water and electric? What about road access? Is that adequate for your predicted customer population? All of these types of property acquisition questions will need to be answered in order to fully develop an accurate project cost.
The total cost should include acquisition, improvements, construction, and any other accessory costs that are necessary for the completion of the project. Often things like permit fees, application fees, engineering specialty costs, surveying costs, improved utility costs, and general land clearing costs are overlooked as critical components to the full cost of the project. If you are looking to fund all or part of the total project, you will also need to understand how long it will take you to earn money. Will you need to pay costs when you open? You may not have enough work to pay the initial bills, let alone pay yourself. But don’t let this stop you for your endeavor.
Don’t be limited by the qualification requirements of traditional banks. There are many different types of lenders that can offer competitive rates with alternative terms and approval processes to help in any type of unique situation. Before you walk into your commercial property mortgage broker make sure you have a solid business plan with the costs laid out the current capital that you can reach. Your financial history will be important to the process and any information that you can provide to give a complete or at least fuller picture of the situation and circumstances for the commercial loan need.