Commercial + Resi Loans (rates?)

[ritchie77]

Hi All, looking at options for purchasing commercial property plus residential premises in one line. There are quite a few shops that come up in SYD with houses/flats on top or at rear and thought maybe an easier way to get into the market affordably (I wouldn?t say at a bargain as there are probably none in this market!).

From my initial research, I am being advised the LVR would likely be 60% if you want to finance under resi rates otherwise more if commercial loan but still only 65-70% LVR ? does this sound ok? It is obviously a lot of money (or access to it) to have when you factor in Stamp Duty plus other costs so maybe this is one of the reasons of having lower demand. Are any others familiar with buying these types of properties in the past to purchase at around $1.5M level and what kind of LVR?s/rates they would be getting? (looking for <4.5% for a resi loan ? would this be achievable?).

My concern is then is there enough demand or is this the reason why these shops plus resi maybe do not increase in capital growth as much as normal resi houses where normal mum and dad?s are competing to buy a house! The set-off is you obviously have more than one incomes and generally they are quite favourable

 

[Mick C]

You get plenty on Parramatta road and the older suburbs like Stanmore/ Summer hill/ Ashfield etc..

Finance wise...2 options.

Resi term- 30 years loan with i/o
* 60% LVR
* Rate Variable from 4.39%- 4.79% depending on loan size..fixed from 4.49%
* No app fee
* Long form/ comm type valuation ~$700

Com term - 15 to 20 years with i/0
* 70-80% LVR
* Rate Variable 5.28% - 5.65% ...fixed from 4.42%- 4.85%
* App fee Varies from 0%- 0.5% of the loan amount
* Comm val ~$700
* Annual review - yes and no ...under $1m normally no...


The biggest difference btw the 2..
CASH FLOW and loan term + set up cost.

 

[Shahin_Afarin]

There are different ways to structure the loan but you will most likely need to fund this via commercial lending. Commercial lending is very different to resi so you need to determine whats important to you.

We have done a few of these lately (one in Penrith and another in Wollongong) and the details were; Interest Rate of 5.35%, no upfront Fees, monthly fees of $14 and valuation fee of $800 and $1,100 (because it was a restaurant downstairs).

 

[ritchie77]

Thanks guys, good input and will let you know if i need any further questions.

For me the resi option sounds better with lower interest rates and less ongoing management/fees - there is a downside with the low LVR however if equity allows likely the better option....