commercial loan Wollongong

Commercial loans are assessed on the property's rental income and your business position, not a consumer serviceability calculator. They require a larger deposit, carry higher rates and run over shorter terms than residential.

What lenders assess

The lease in place, the quality and length of the tenancy, the tenant's covenant, the net rental yield and how easily the property could be re-let if the tenant leaves.

Structural differences

Terms of fifteen years are common where a residential home loan runs thirty, and many facilities carry annual or triennial review dates where the lender can reassess.

Fewer consumer protections

Commercial lending sits outside the National Credit Code, which means fewer protections but greater flexibility in how the deal can be structured.

Because appetite varies enormously by asset class and location, lender selection matters far more on a commercial deal than a residential one. Our commercial loans in Wollongong page covers the local lender landscape.

Commercial property requires a substantially larger deposit than the 5% to 20% range familiar to home buyers, and the exact requirement depends heavily on the asset class.

Asset classes lenders prefer

Standard industrial and warehouse space is viewed most favourably. Wollongong has significant stock of this around Port Kembla, Unanderra and the Kembla Grange corridor.

Middle ground

Retail and office in established Wollongong locations.

Tighter gearing

Specialised assets such as service stations, childcare centres, pubs, medical fitouts and rural property, because they are harder to sell if the lender needs to. Vacant property is assessed more conservatively again than a leased asset with a strong tenant.

Reducing the cash required

Many buyers use equity in residential property as additional security. See how to access equity in Wollongong, and our commercial loans guide for asset class detail. That has consequences worth thinking through, and we will walk you through them first.

Commercial terms often run fifteen years or less, with interest only periods available at the start and a formal review date where the lender reassesses the facility.

Review dates

At review you may be asked for updated financials, a fresh valuation, or evidence the lease is still in place.

Covenants

Ongoing conditions are common, including interest cover ratios, loan to value ratio limits, annual reporting requirements and restrictions on further borrowing. Breaching one can trigger a repricing or a demand to reduce the facility even if every repayment has been made on time.

Fees to include when comparing

Line fees and annual review fees apply on most commercial facilities. A lower headline rate with a higher line fee can be the more expensive deal.

We read the covenants before you sign and flag anything that could realistically be tripped by normal fluctuations in your business. If you also need working capital alongside the property facility, see business loans.

Yes, and owner occupied commercial purchases are usually assessed more favourably than investment purchases, because the lender can rely on your trading business as the source of repayment rather than a third party tenant.

What lenders want to see

Your business financials, an ATO portal, and evidence the business can service the loan on top of existing commitments. The rent you currently pay elsewhere is generally added back as a saving, which improves the position. See also home loans for business owners.

Buying through a separate entity

Many Wollongong business owners buy through a trust or self managed super fund and lease the premises back to the trading business. That can deliver asset protection and tax outcomes, but the lease must be on genuine arm's length commercial terms and the structure set up correctly from the start.

These decisions have long tail consequences for tax, land tax and succession, so we work alongside your accountant rather than deciding in isolation.