For anyone who hasn't done much in the way of Property Development, the concept of commercial lending is probably a bit vague. Most of us rely on residential lending.
But when you get into development there’s a good chance that as your projects scale up in size, you’ll eventually scale into commercial lending. The good news is that unlike standard residential loans, the terms for commercial property loans are often negotiable.
But before we break down the key differences between residential and commercial, let's take a quick look at what both you and the lender need to think about when it comes to loans.
LVR, loan size and rates
When you approach a lender as a Developer, there's a number of things they’re going to be looking at, especially how much you’re wanting to borrow and at what level of gearing.
Most of you will be familiar with the term LVR or ‘loan to value ratio’. That's effectively how much cash we've actually got as a deposit for the deal, versus how much we'll be borrowing.
Then there's the different kinds of lenders that can actually lend which include bank, non-bank, mezzanine and private lending.
The interest rates will vary depending upon who the lending provider is, the amount of security and the type of loan.
But when you get into development there’s a good chance that as your projects scale up in size, you’ll eventually scale into commercial lending. The good news is that unlike standard residential loans, the terms for commercial property loans are often negotiable.
But before we break down the key differences between residential and commercial, let's take a quick look at what both you and the lender need to think about when it comes to loans.
LVR, loan size and rates
When you approach a lender as a Developer, there's a number of things they’re going to be looking at, especially how much you’re wanting to borrow and at what level of gearing.
Most of you will be familiar with the term LVR or ‘loan to value ratio’. That's effectively how much cash we've actually got as a deposit for the deal, versus how much we'll be borrowing.
Then there's the different kinds of lenders that can actually lend which include bank, non-bank, mezzanine and private lending.
The interest rates will vary depending upon who the lending provider is, the amount of security and the type of loan.