Finding a Commercial Mortgage Broker


Why You Need to Find a Commercial Mortgage Broker

If you are a commercial property investor or when a business wants to acquire, refinance or redevelop a property they’ll need to obtain a commercial mortgage. While this is something you can do on your own, you stand the best chance of getting a good rate and term when you use a commercial mortgage broker.

Commercial mortgages are mortgage loans that are secured by a piece of commercial property. This generally but not always will include the property being acquired by the loan. Commercial properties can include industrial or commercial warehouses, office buildings, shopping centres, apartment complexes and private medical facilities among many others.

commercial mortgages NZ

Dollars for commercial mortgages

As with any type of loan, you want to get the best interest rate, terms and repayment options. Knowing how to compare the available commercial mortgage options takes time and experience. This is where a commercial mortgage broker can assist you.

The commercial mortgage lending process begins with your application. Your mortgage broker will obtain all of the information necessary to submit your application to several companies or even private individuals that are likely candidates. A mortgage broker is not a lender. They work with you to find potential lenders.

A commercial mortgage broker can advise you before you begin the application process of your chances of getting a loan. Generally the mortgage will be based on the debt service coverage ratio and the loan to value ratio of the property.

The debt service ratio required by most lenders is 1.1 to 1.4, this is the amount of income the property makes over the mortgage payment amount. For new properties or those under renovation the lender will look at the rents or costs per square metre. They will also consider the location, property use and the financial health of the commercial real estate market in the area.

The standard loan to value ratio for most commercial loans are 55 percent to 70 percent, which is much lower than residential properties. The loan to value ratio compares the amount of the mortgage to the total appraised value of the property.

Since many lenders may require a application fee, it’s best to first determine if you have a reasonable chance at successfully obtaining a loan. Generally these fees are used to cover the expenses associated with the loan process such as appraisals.

Your commercial mortgage broker can then assist in guiding you through the lender’s underwriting process. This process may include a review of your (or your businesses) finances, as well as, a financial review of the property. There will be various reports that need to be commissioned including appraisals, these can also be handled by your mortgage broker.

The due diligence a lender does on a commercial mortgage can include touring the site, environmental impact studies, engineering reports and background checks on the borrower. Many of these can be handled through commercial mortgage brokers.

The interest rates can be greatly affected by the information obtained during the underwriting process as well as the current market interest rates. These rates are usually much higher than residential mortgages and are available as a fixed rate or flexible rate. Your commercial mortgage broker can advice you on which type of loan would best suit your needs.

The terms for a commercial loan generally range between five and ten years for established commercial properties and one to three years for new properties or those under renovation. Multi-family properties may be eligible for government programs which can extend the term of their loans to thirty years. A knowledgeable commercial mortgage broker can assist you in determining which type of loan you are qualified for.

Your mortgage broker can assist you by ensuring you have options when it comes to your loan. They can obtain multiple quotes from qualified lenders, manage the application process and guide you to the mortgage is best for your business.

Commercial mortgage broker Auckland

Commercial mortgage broker Auckland

There are not as many commercial brokers as there are residential ones. Further they do not advertise in the mass media so they are less well known by the public at large. Sometimes the main banks will lend on commercial property deals but they have strict lending guidelines. Sometimes these restrictions will not allow the deal to go ahead.

In this situation a private lender or dedicated commercial financing company may be able to help. One of the biggest private commercial mortgage companies is Global Pacific. You can see more about them here They have successfully arranged funding in numerous industrial, retail and office lending situations. Click here to get the ball rolling for you.



Finding Commercial Finance For New Zealand Businesses


Options To Consider For Finding Commercial Finance For New Zealand Businesses

When you are trying to obtain financing for traditional types of property including homes, cars, or simply a piece of undeveloped land, as long as you have the proper credit rating, and the finances to fund the loan through gainful employment, it’s easy to get a loan for the property or vehicle that you want to buy. However, when you are trying to purchase something less traditional such as a campground, assisted living facilities or even a funeral home, obtaining a commercial loan for these types of businesses can be slightly problematic. Here are some tips on finding commercial finance options that are not only available, but affordable as well.

What Is Commercial Financing?

Commercial loan broker NZ

Commercial loan broker NZ

Commercial financing is simply getting a commercial mortgage, or a mortgage loan that is actually secured by a commercial piece of property. This could be something such as an apartment complex, a light industrial warehouse, a retail outlet or even an office building. There are many reasons for obtaining these types of properties including planning to redevelop the property, refinance an existing commercial mortgage, or simply purchasing the building as an investment. There are other types of commercial financing too such as plant, machinery, leases, companies or franchises. In short, major purchases by a business are likely to need commercial financing of some type.

Important Aspects Of NZ Commercial Financing

Commercial financing involves understanding a couple terms that are indicative of this type of loan. Some of the terms are also used when getting traditional mortgages or refinancing, therefore they might be familiar. The loan amount is determined by the LTV, or the loan to value ratios. The loan structure must be agreed upon, sometimes using what is called mezzanine finance. There will be interest rates, fees, and terms in regard to prepayment penalties and the length of the loan itself. Finally, these loans are usually amortised, which means the borrower will pay on both the principal amount and the interest that is owed.

Another key aspect, especially for buying commercial property is that the down-payment is higher than for a residential mortgage. Currently in New Zealand for a residential mortgage the banks require 20 percent deposit to buy a house. For commercial mortgages the deposit is often 35% or even more.

Another key aspect is the forecast cash-flow from both the project itself and the business as it currently performs. The lender wants to know if the borrower can afford to make the repayments on the loan.

Finding Affordable Commercial Finance Lenders

If the loan is being used to acquire another company the loan will be dependent upon the financial performance of the target company. If the new business owner is unable to conduct the business in a profitable manner, they may default on the loan.

It’s difficult to arrange this type of financing with some finance companies for this reason, and the type of business can also play a role in how easy or difficult it is to obtain this type of financing. If the lender does not understand the complexity is involved with special-purpose properties, or they do not believe that you will be able to keep the business running profitably, getting this financing may fall through. This can make it very difficult to get loans for the specialty properties or businesses.

Commercial loans NZ

Get the commercial loan you need

Another option for commercial finance is member-based organisations.  This one for example, can offer financing for a variety of business purposes including equipment and vehicle finance.

The easiest way to quickly find affordable commercial finance lenders is to search the web for commercial finance brokers who interact with lenders that specifically will lend money for commercial projects. Once you have found a broker that can connect you with commercial finance lenders, you should be able to get the money that you need to finance your project, or purchase the business that you want to acquire.

Finding commercial finance lenders is not that difficult, especially with the Internet. Your search should yield several brokers that will help you connect with lenders that are willing to help. Using these simple tips, you should be able to find commercial financing very quickly, and obtain the property or business that you want to buy for commercial purposes.