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Commercial Loans

Investing in commercial property such as offices, stores, factories, warehouses or even car parks can be profitable and affordable and can sometimes cost less than investing in residential property.

At Home Loan Republic we are experts in commercial property finance and can guide you through the specific considerations for this kind of loan.

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Commercial versus residential

There are several benefits to commercial property investment when compared to investing in residential property:

  1. The lease on a commercial property will usually run for several years whereas a residential property lease is often renewed every year. This means your rental income, which can be revised annually, is more secure.
  2. Commercial property is subject to Goods and Services Tax (GST) so you might have to add 10% to the purchase price. However, as an investor, you can reclaim the GST as an input tax credit against the GST charged as part of the rent.
  3. With commercial property, costs such as rates and maintenance are the responsibility of the lessee, not the lessor so you keep more of the rent. If the property is subject to ongoing expenses, it is important that the lease details precisely what these are and who is responsible for paying them.

What are the potential downsides?

Investing in commercial property is usually considered high risk when compared to residential property investment.

Most commercial properties require a larger deposit than residential properties. This can be as much as 30% of the value.

If the property is empty and not a ‘going concern’ it may be harder to find the right tenant quickly. Also, some commercial properties have a specific use – such as a warehouse or car park. An office suite or retail outlet, which could appeal to a broader market, might be a better choice.

Funding your investment

Funding a commercial property investment is much the same as taking out a mortgage on a house. There are loans available with a variety of features including variable interest rates, fixed rates, interest-only, split loans and line of credit loans. Some loans offer useful facilities such as redraw, offset or no-fee additional repayments.

Using the equity in your home as collateral against your commercial property loan can reduce the interest rate.

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Choosing the right loan

Finding the right loan for the purchase of a commercial property is a little more complex than sourcing the most appropriate residential property loan.

There are many factors to consider including the type of property, its location, what it is used for and how long you intend to own it.

How a Home Loan Republic broker can help

As with regular home loans, the team at Home Loan Republic can call upon the services of 28 lenders all of whom have a number of suitable products on offer. The choice is large and varied which is why it is important to get expert advice before taking the plunge.

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Get Your Free Home Loan Health Check

At Home Loan Republic, we regularly save our clients thousands of dollars by assessing their current home loan situation and taking advantage of better deals. Arrange your own Home Loan Health Check today and reap the benefits.

Enquire about a FREE Home Loan Health Check or call 0499 902 735

Get in touch with a Home Loan Republic mortgage broker about securing a commercial loan.
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