AFN Commercial Property Finance

Commercial Property covers four main groupings - office, retail, industrial and specialised securities. Finance for properties in the first three categories is a relatively simple matter. As a general rule lenders will advance 65% - 75% of their valuation for straight term loans.

The reason that the maximum loan to valuation ratio is lower than for residential property is the higher level of risk associated with commercial property. There are a number of specialist property lenders who can generally offer better term and conditions than the traditional banks for transactions up to $4million.

Specialised securities are those where the premises are designed for a specific usage e.g. a hotel that has limited alternative usage. Value is also influenced by the profitability of the operation. Lenders will generally advance only 50% - 60% of value against the freehold of specialised securities.

Applying for Finance
Commercial property transactions are far more complex than residential loans, and each transaction is assessed on its individual merits. Do not expect a 24 hour response. The larger and more complex the transaction the longer the approval time. Allow up to a week for approval in principal. Frequently valuers will require more than a week to complete their valuation.

AFN's Role
AFN acts as a consultant / broker for commercial property loans. AFN will charge the client a fee based on the size and complexity of the transaction. The fee will be payable at settlement. If the loan does not settle a reduced (agreed) fee will be payable on invoice. As a guide the success fee will be in the vicinity of 1% of the loan amount. For larger loans this may be reduced.

If you engage our services our role is:
Assessment of the transaction - we will provide you with a detailed assessment of the transaction, your options, recommendations on loan structure and the estimated costs as well as the information you will be required to provide. It is likely that we may also need to liaise with your accountant to ensure that our proposals conform with existing taxation and investment planning.

Preparation of the Credit Submission - we will complete the application on your behalf, prepare a credit summary with supporting documents and lodge it with the selected lender.

Negotiation of the Facility - For larger transactions we may need to make a formal presentation to the lender. Often the expressed needs of the client and the lender's requirements do not match. With a strong background in commercial property lending we are usually able to negotiate an outcome that is acceptable to both parties.

Pre and Post Settlement Liaison - AFN will work with the client and the lender to co-ordinate the satisfaction of pre settlement requirements and reviewing of the documentation. Once the loan has settled we will continue to monitor the facility to ensure that it has met the required objectives.

If you're contemplating refinance or purchase of a commercial property and require additional information phone (03) 9899 9492

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