Current Interest Rates for Commercial Property

[Dazz]

From your experience is that income multiple increased due to the scale and size of the deal or just a greater emphasis on lending conservatism by the banks?

Neither, it's due to the chicken-**** funders and all of the tosspots in the Bank's credit dept not having a donkeys clue as to what they are actually looking at.

When the typical Bank credit donkey lives in their 450K PPoR with a 200K mortgage and have a few CBA shares and 15K cash in the Bank, they sort of struggle to fully grasp what investors of substance are trying to do.

 

[Rooster]

When the typical Bank credit donkey lives in their 450K PPoR with a 200K mortgage and have a few CBA shares and 15K cash in the Bank, they sort of struggle to fully grasp what investors of substance are trying to do.

Fair point.

So if the peg doesn't fit it's a big fat no?

I've often wondered if it is a help or hinderance to have broker representation, rather than yourself, when trying to get a deal across the line.

Have you always negotiated for yourself Dazz?

Cheers

Rooster

 

[Dazz]

I used to do all my own negotiating when credit was easy to come by.

Managed to get some good rates and big bags of cash thrown my way, but unfortunately I was clueless as to the X-coll monster. I ended up with twisted up mortgages that looked like the cat had played with a ball of string for a week.

Since Banks changed everything a few years ago, I've used Brokers. I'm proud to say that Rolf Latham on here has been extremely helpful in not only untangling some of my mess, but also done the right thing by my extended family, for which I am very grateful.

I give my support / business to Rolf now....the Banks tend to ask him slightly less questions before approval is given than otherwise they would we me applying directly. I still need to provide my left shoe size and diameter of underpants before approval, but the Banks don't probe as deep with a Broker as a buffer.

The rolling commissions he creams off every deal usually allow Rolf to buy a Lambo or two....but I don't mind being charged extra.....he looks and smells funny, but gets the job done with minimum fuss.

 

[Mick C]

Commerical property rate comes down to the lender's appetite for the deal and the security.

There's def a lot more variables to look at.

Pricing works on-

1. Security ( if any)
2. Type of Business
3. Experience
4. Loan Amount
5. LVR- Deposit
6. Business Plan
7. Business Strategy and Use of funds
8. Credit History and Financial History
9. Asset and Liabilities
10. Borrower type - Company, Trust, Personal
11. The Lender's Appetite for this sort of deal
12. Type of Rate - Bill rate, Fixed , term Variable


80% LVR commercial loans are available if the deal adds up + the correct Appetite for that lender.

I find sometimes im helping client find and chase up banks that fit that "Appetite " more then anything else lol....
--

Annual review are common, there are some lenders that will offer " no review or review once every 5 years only etc..." as part of their feature or selling point- but normally this benefit comes at cost.

Regards
Michael

 

[Aaron_C]

That is because it is common practice that as part of the bank loan for a CIP - that the property HAS to be leased out. If not, they can call in the loan and you'll be in a real pickle because you have no rental income and the property resell value is lower because it is empty.

But as Mick and others have indicated - Commercial Loans are not 'vanilla' like residential loans - they vary in rate, LVR etc depending on so many factors