Lenders using Commercial Property as Security for Residential Loan

[joyoboyo]

Hi All

I've been informed that Suncorp have changed their policy with regards using commercial property as security for a residential loan. This must have been a recent change.

Currently have an application in to releases some equity in a commercial office which will then be used for a residential purchase... As I understand it as long as I have 30% equity in the commercial then surely I am just increasing my loan on that security and that money is covered by the commercial loan.

The residential loan is then secured on the resi property I am buying and I am simply using the money I have released from the commercial property.

Are there any brokers on here that can confirm this is true or not? If so, which banks do allow commercial as security for residential.

Also, i am getting a little confused with all this.

Thanks

 

[Aaron_C]

It's not that difficult. There are two loans:
Loan 1 - loan secured by commercial office. Commercial rates charged.
Loan 2 - loan secured by residential property. Residential rates charged.

 

[Blacky]

It's not that difficult. There are two loans:
Loan 1 - loan secured by commercial office. Commercial rates charged.
Loan 2 - loan secured by residential property. Residential rates charged.

Im not sure it is that simple Aaron? I might be wrong here, however the commercial loan will not be covered by the consumer credit code - therefore shouldnt be able to be used when lending to a consumer for consumer purposes.

It may depend on which enitity is borrowing the money and how.

I may be wrong however - I remember from my banking days that it was difficult to provide a commercial loan in a personal name due to the laws around the consumer credit code...

Just a thought...

 

[Aaron_C]

The OP seems to be under the misunderstanding that the residential loan can use the commercial property as security. This is not the case - a commercial loan for a commercial property, and a residential loan for a residential security.

Now, as for NCCP, it is possible to cash out a commercial property for non-commercial use. Otherwise there would be very little commercial lending.