Commercial Mortgages – Things to you should know

Whether you are moving to bigger office or simply expanding your commercial portfolio, commercial mortgage is a straightforward way to do so.

Commercial mortgage is basically a mortgage loan used to acquire, refinance, or redevelop a commercial property such as office building, shopping center, industrial warehouse or apartment complex.

Commercialmortgages are structured in order to cater to the needs of both borrower and the lender. The loan amount includes terms like interest rate, term (sometimes referred to as the “maturity”), and prepayment flexibility and amortization schedule.

Lenders who want to be assured that their principal is safe, or want to gain a competitive rate of interest consider commercial mortgage suitable.

Here are some benefits of commercial mortgage:

Lower interest rates – Commercial property mortgages usually have lower interest rates. With fixed monthly repayments, you can use the amount in your business planning and forecasting.

Capital gains – When you buy a commercial property, you make a substantial capital gain this helps you realize capital growth over a longer period.

Renting potential – If you have a property, you can monetize it by renting out.

Financial planning – The payment plan of commercial property mortgage extends for a number of years, which make you concentrate on different aspects of your business instead of generating capital to pay off the loan on urgent basis.

If you are willing to extend your commercial property portfolio, you better approach an alternative lender for commercial mortgage.

An alternative mortgage provides loan even you have a bad credit history and a simpler process than what a traditional bank offers.

Take a look at what possible loan options can an alternative lender may provide you:

• Interest-only or Principal & Interest loans
• Variable or fixed rates
• Full doc
• Low-Doc (no financials required)
• Construction loans
• No-Doc (no documentation required)
• Loan splits

Approach a reputed alternative lender to make the most of the commercial property trends in Australia.

Advantages of Buying Property through SMSFs

Today, an increasing number of investors are buying property through Self Managed Super Funds (SMSFs). After legislation changes in Superannuation Industry Supervision Act (SIS ACT) in 2007, your self-managed Super Fund can be used to borrow funds in order to purchase a property of any kind – from residential, commercial, to rural.

The changes introduced to legislation allow Self Managed Super Funds to borrow money, as long as an acceptable structure was utilised.

SMSFloans basically are ‘Limited Recourse’, that means the lender cannot have any asset acquired through the Self Managed Super Fund other than the property provided as collateral. Simply put, the rights of the lender against the super fund in the event of the facility defaulting are limited to the security of property.

In this article, we are discussing the advantages of buying property through SMSFs.

There you go.

Advantages

• If you buy a property with your super fund, hold it until you retire and you come under the pension phase; as you will need not pay tax on capital gains, whether you sell, rent or hold the property.
• Before retirement, rent and capital gains earned by the SMSFs are subjected to be taxed only 15 percent. And if you hold the property for more than a year, the tax rate would be dropped to 10 percent on capital gains.
• You would get direct control of your super investments and understanding of where the money is being invested.
• Diversification in your portfolio
• Expenses such as interest can be claimed as tax deduction
• No capital gain tax on sale of property if sold during pension phase
• Wider investment options and control over your future
• Funds can be paid out or borrowings reduced at any time
• Funds can be used to acquire property for a greater value than that of the funds’ ‘Net worth’
• All Self-Managed Super Fund assets are safe and cannot be violated by any lender owing to the limited recourse provisions in section 67 (4A) of the SIS (Superannuation Industry – Supervision) Act

Here are some features of Self-Managed Super Fund loans:

• Residential property borrowing up to 80% LVR and up to 30 year terms
• Rural Property up to 65% LVR and up to 20 years
• Commercial property up to 70% LVR and up to 20 years

Depending upon the facility, rate of interest varies.

You can approach an alternative lender like Global Capital Commercial to understand the benefits of SMSFs.