Commercial Loans: Everything you need to know
A Commercial Loan is used to buy a property or business that is a registered commercial establishment will use exclusively to run a business. Like an office building, a physical retail shop or a whole building of shops, warehouses and godowns, factories, and more.
As with other property loans, a commercial loan is a secured loan where the purchased property is the collateral. Commercial loans are used to procure commercial properties like:
- Offices from a single suite to an entire floor of a commercial building to entire buildings
- Showrooms and retail premises, from small shops to whole shopping centres
- Significant residential and retirement buildings or facilities
- Any structure used to run an agriculture-based business
- Industrial units such as factories, warehouses, and godowns
So, why buy a commercial property?
Higher asset value appreciation
Commercial properties for sale are far lesser in supply and therefore enjoy a greater demand. This is one of the most fundamental reasons why commercial properties usually appreciate more than other property types.
Income from leases
Lease income from commercial properties is a repeating income stream. It becomes a good source of capital to repay your commercial loan too. Commercial property owners enjoy a higher return on investment than residential property owners.
No wonder commercial properties with existing tenants and leases are always in high demand! And did you know that in New Zealand, tenants are responsible for furnishing, insurance and repairs?
Tax benefits
Commercial property mortgage repayments, depreciation deductions, and maintenance costs can save a considerable part of the lease you collect from your tenants. We at Kripa Financial Solutions Limited would be happy to get you a good tax advisor. He/she could help you understand and leverage all the tax benefits of owning a commercial property.
Take advantage of lower business expenses and higher profits
If you are running a business, having your commercial property to run the company will save you lease expenses. Therefore lowering your operating expenses and increasing profits.
KEY FACTS
Commercial Loans
How much can you borrow?
Typically around 65%.
Banks generally issue commercial loans for 65% of the commercial property's value. However, at Kripa, we have noticed several buyers securing a higher loan (up to 80%) by offering more assets as security collateral
What are the typical repayment terms?
You can expect a commercial loan's interest rate is usually 1% to 2% higher than home loan rates. And most banks stipulate a loan repayment period of 10-15 years.
Necessary Documentation
There are only two requirements for commercial loans.
- Commercial Property Sale & Purchase Agreement
- Copy of the Lease Agreement between you and your tenant - the business establishment that is taking your commercial property on lease. You will need to mention the rent, excluding GST.
Why Kripa Financial Solutions Limited?
Simi Sethu and Sethu Arjunan found Kripa Financial Solutions Limited. A former banker & sales professional, Simi has been actively involved in the community, helping customers across New Zealand to achieve their portfolio of properties.
High approval rates
We at Kripa are experts in presenting your commercial loan application and repayment capabilities. Therefore giving your commercial loan a better chance of getting approved.
Higher loan amounts
We draft your application in a manner that encourages banks to disburse a higher loan amount - to make your commercial property purchase as smooth as possible.
Lower, better, negotiated interest rates
We evaluate current commercial loan proposals from various lenders and banks to see how they could be structured to lower the interest. We also negotiate with several lenders and banks on your behalf to get the best possible commercial loan rate. Because the lower the interest is, the higher the repayment towards the principal amount. And better for your business.
Speedy loan disbursals
We understand that your commercial property seller is evaluating several buyers simultaneously. And the speed of turnaround could help you compete with other buyers interested in the same commercial property.
Interested in our services? We’re here to help!
We want to know your needs exactly so that we can provide the perfect solution. Let us know what you want and we’ll do our best to help.