Commercial Property Mortgage

Commercial Property Mortgage is a mortgage used to purchase commercial property. It is usually more expensive than a residential mortgage in terms of interest rates, though in recent times this gap has narrowed significantly.

The rates and fee structures are quite different to residential mortgages. The interest rate is normally calculated from the 90 day bank bill rate, plus a margin. The application fees are predominantly 0.5% of the loan amount and most loans will have ongoing fees. The terms are normally 15 years principal and interest, or 5 years interest only where at the end of a period the loan is reapplied for or renewed.

Traditionally the lending ratios for these loans are 70% for general purpose securities, such as office spaces and factory units. The more specialised the security, the lower the lending ratio as the resale market shrinks, for example abattoirs, veterinary surgeries and hotels. In some instances Loans my Way can achieve up to 80% lending ratios on sole commercial security.