Who has the lowest commercial loan rate?

Hi,

As you know from my other thread, have just bought a CIP.

I've noticed that the commercial lending market is not very transparent, and lending is very much more on a case by case basis (property and credit metric dependant).

Having said that, I'd be keen to hear what sort of interest rates people are paying for commercial loans secured against CIPs?

Mine is variable at 8.24% with Adelaide Bank (25 year term, 3 year IO, and no reviews) at 75% LVR.

Whilst I love the 25 year term (very safe for my first CIP) and the high LVR I'm the first to admit thats a very very high interest rate.

I've seen at least one lender (ING) who can do 6.25% though no higher than 60% LVR in my area.

So who is paying what rates? With which banks, and for what sort of lending, LVR's, credit metrics?

Who have you been impressed with, and who has disappointed?

Thanks!!
 
BankWest are still only doing business transactions at the moment, meaning they will not lend for commercial investment properties unless it is to an existing customer. Its very hard to say who is doing the lowest rates as typically each deal is priced individually as a margin over the bank bill. A stronger deal at a low LVR will be given a more attractive margin. Of the lenders who go off published rates (Adelaide Bank, IMB, ING to name a few), ING are the cheapest that I know of, but the rate is 6.85% for commercial and in my experience they will only do very straight forward deals. At 75%, IMB and Adelaide Bank are the two major lenders with both at around 8.24%, so Trogdor, I think you are getting as good a deal as you can. Of the major banks, NAB and CBA will still do 70%, while you'll have a hard time doing more than 65% through ANZ, Westpac you can pretty much forget about at the moment.

Regards,

Cameron Perry
Commercial Finance Specialist
 
Last edited by a moderator:
I have commercial business clients who bank anz/suncorp/nab etc.

It drives them all absolutely nuts with the quarterly reviews, having to get accountants to do up info to keep the banks happy

Sometimes that higher rate, longer term, no review can be a godsend.
 
I have commercial business clients who bank anz/suncorp/nab etc.

It drives them all absolutely nuts with the quarterly reviews, having to get accountants to do up info to keep the banks happy

Sometimes that higher rate, longer term, no review can be a godsend.

What is usually required to be submitted as part of these reveiws?
 
Thanks everybody. I should have posted more detail.

The reason I'm asking is that, although I know for a 75% LVR lend Adelaide bank is in the ballpark on interest rate, when my "initial" period expires (when refinancing penalties are no longer applicable in 48 months) I'm considering if there would be any benefit in refinancing at 65% or 60% LVR in order to save on interest expenses.

If the margin difference is only 50bps or so, then it would be a poor use of equity, but if I could save say 150 - 200bps+ then to me that would be a good use of the extra equity to free up a lot of extra cashflow.


ING are the cheapest that I know of, but the rate is 6.85% for commercial and in my experience they will only do very straight forward deals.

Have you gotten any deals across with them at this rate? What is a "straight forward deal"?

Of the major banks, NAB and CBA will still do 70%, while you'll have a hard time doing more than 65% through ANZ, Westpac you can pretty much forget about at the moment.

So for a 60 or 65% lend with good credit metrics (say 3.00 - 4.00x DSCR with personal guarantees factored in) how low could you squeeze the big 4 down to (for example by giving them some decent resi lending thrown in)?

Thanks again for your advice!
 
Thanks everybody. I should have posted more detail.

The reason I'm asking is that, although I know for a 75% LVR lend Adelaide bank is in the ballpark on interest rate, when my "initial" period expires (when refinancing penalties are no longer applicable in 48 months) I'm considering if there would be any benefit in refinancing at 65% or 60% LVR in order to save on interest expenses.

If the margin difference is only 50bps or so, then it would be a poor use of equity, but if I could save say 150 - 200bps+ then to me that would be a good use of the extra equity to free up a lot of extra cashflow.




Have you gotten any deals across with them at this rate? What is a "straight forward deal"?

Yes, by straightforward deal, the property must be in a metro area, be tenanted with good lease and have strong interest cover (they ask for 1.3 times, with rate on incoming debt loaded by 2%). They also like LVR's to be limited to 60% or amortised to a 60% lend within 5 years.

So for a 60 or 65% lend with good credit metrics (say 3.00 - 4.00x DSCR with personal guarantees factored in) how low could you squeeze the big 4 down to (for example by giving them some decent resi lending thrown in)?

Thanks again for your advice!

No problem Trogdo. With debt servicing ratio that strong and residential security, you could get a pretty good rate, around 2.5% margin is very good in the current market (rate would be around 6.7% on current bank bill). I wouldn't mix in the securities if possible though. Better to borrow seperately on residential lend through the commercial section and access residential rates. That way your blended rate could be lower than the overall commercial rate, plus you reduce the control the bank has over your future borrowings. I hope that helps.

Regards,

Cameron Perry
Commercial Finance Specialist
 
Last edited by a moderator:
6.7 on bill backed short term IO is damn good, but if thats all resi backed, its only ok.

Just got a little 2 mill + formal on one of the big 4 at 7.20 bill based at 70 % LVR, with predominant CBD commercial security.

Best decent non reviewable term loan seems to be ABL at around 7.74 and 65 %.

I believe there is merit in the longer term variable rate backed deals if you have any concerns that you may become a RHG at review time.

There is lots and lots of talk and promises around comm money at the moment, just not much actual money..........

ta
rolf
 
yep with that ^^^.

for resi dev in Perth, Bankwest mid 9s plus decent fees, RAC 10.25% minimal fees - all needing 125% debt coverage and/or 100% contract value presales.

IR is negotiable dependant on LVR as usual - although for resi devvy max 70%.

Meeting with P&N this week as well.

will be interesting to sound out their comm stuff.
 
That's a decent jump there Trogdor. 75 basis points.

You did get a 25 yr loan term - great
You did get no reviews - great
You did get 75% LVR - superb.



In the same time frame, mine has also jumped 75 basis points.


I got a 2 yr term.
I have the chance of a review every year.
I only got 70% LVR


My only consolation is my interest rate jumped from 7.09% up to 7.84%


It's hard to weigh up the benefits. Right now you're probably thinking I'm onto a winner....but if I get negatively reviewed, or the Tenant doesn't renew the Lease, you'll quickly change your mind. That extra 5% on the LVR means you tip in far less, or alternatively can stretch a lot higher up the food chain....so all up I reckon you did OK. :)
 
Thanks Dazz.

Agree with that - there is a lot of sleep at night benefits for paying the extra percent or so.

Only thing is these no review term loans top out in the small to middle end of the spectrum $$ wise, but that problem is still some ways off for me (and not a bad problem to be having).
 
anyone that posts bankwest and commercial loans has not been watching the market
bankwest has been out of development funding for about 12 months and there is a class action with regards to it so they are not into comm funding
westpac forget it at this stage nothing going thru credit unless you wish to sell your kids
cba only if you know the internal guys
so having the lowest rate is not alot of point if they arn't lending
would like to know who is lending comm at the moment
 
we're doing a inner city hotel at the moment - 34 bedrooms I think @65-70% lvr. 2 lenders looking at it - one if we can get full doc @7.5 depending on what the 2010 figures look like. The other doesnt care about the figures and conditionally approved at @9.25 from memory.
Lender 2 is pricey but they're the only 2 who've even said they'd give it a go. the rest saw it as too high risk. End of the day both are better than the existing mortgagee.

Another big one is a 70 secured by building 10 secured by business. insanely strong proposal. Thats been priced at 8% with room to move depending on what the guy is prepared to bring across to the new lender (business accounts, FX facilities, leasing etc etc)
 
Top