The fundamentals surrounding borrowing for commercial endeavours are a little different from those that affect residential. Commercial and business ventures often require more of a specialist approach as the bank needs to consider more factors than a standard-residential purchase.

Whether you are looking to buy a commercial property to house your company, as an investment or needing to get a loan to expand your business, there are a number of different options available.

The playing field for commercial property investment is more even now as the Reserve Bank has cut what they will lend against residential investment. Where we used to be able to get 80% (and higher) for a residential investment property through the banks, this is now limited to 65% - which is the same as the borrowing limit imposed when using commercial property as security.

The general differences that remain between commercial and residential lending include the length of time you can borrow for – 15-year maximum for a commercial, tougher servicing requirements, higher rates & more scrutiny of the lease & tenants who will occupy the space.

It’s important to know that trading banks change their appetite all of time in regard to the type of lending they want to be involved with. This applies equally to commercial and business lending. Just because you have been with a particular bank for many years does not mean that they will lend you the most money for a commercial venture.

When it comes to funding for the development of commercial property, or where commercial property is acquired for the purposes of tenanting and on-selling, there are also options outside the main trading banks. These lenders understand quick turn-around of property and focus on the asset as opposed to the need to prove income. These types of lenders are also useful for those borrowers who would like to hold a property for a longer term but cannot prove income at the time of purchase.

There are options (and benefits) regards utilising existing residential property when purchasing a commercial building and it is important to present the deal in the right way to the right people at the bank. That’s what we specialise in at Edge Mortgages. For nearly 20 years we have helped many people into commercial property, and with business lending.