How to Get The Best Commercial Mortgage Deals in NZ
Given that a loan for an industrial or business premises is usually of considerable size, it is absolutely understandable why borrowers want to get the best commercial mortgage deals in NZ they can. Even half a point can make a huge difference which becomes even more important on higher loans. Unfortunately, looking for competitive rates means that you will have to offer your broker or lender means that you will need to provide an extensive amount of information to present your case which will give them a higher degree of confidence in you. It is only after they have gone through this lengthy process that they may consider offering you a better deal on your commercial mortgage interest rate.
While this answer may not be the direct or simple solution you were hipping for, none the less, the more information and supporting data you can provide to any potential lender, the stronger your case will be. In short, a lender wants to have a good feeling that they will be able to get their money back. To get this confidence they want to see that borrowers have thoroughly done their home work on the project they want funding for. They also want to see that the business is growing, meeting forecasts and that there are no major surprises in the business results. Surprisingly, a sudden unforeseen jump in profits can cause a sense of unease with some lenders. This is because they wonder why the business did not foresee this happening. And if they did not see a wave of profits coming, what else are they missing?
However, it is important to keep in mind that these banks and lenders will ask you for quite a few documents before deciding to offer you their best rates. After all, it is important to know everything about the company and people that obtain that loan.
It is a general rule that the absolute best rates are available for those business owners that have no negative issues in their credit history. If there are any discrepancies, then having documents to explain these will help your case.
If you are borrowing to finance an expansion of your business then you need to be able to show why you think you can grow, where the growth will come from and the risks the company faces. It is better to be realistic and talk about risks than to hide them from potential lenders. This shows you understand your market and the inherent challenges of being in business.
If you want to buy the building that you use to carry out your business to save expenditure on rent, then you need to be able to show that your business can support the mortgage repayments. These may well be higher than the current rent. This article talks about the comparison between renting and buying your business premises. You also need to have access to the down payment which can sometimes be as high as 35% of the buildings valuation i.e. you can only get a mortgage for 65%.
Property investors are also frequent borrowers for commercial mortgages in Auckland. They need to show that the rental cash flows are sufficient to cover the mortgage repayments. This may be interest only as this is a common type of mortgage for commercial borrowing purposes.
What do commercial mortgage lenders look for?
Here are a few tips that will show you what lenders are interested in:
- Profitable business: meaning that the company made a profit in the past 3 years.
- Verifiable financial information: annual accounts prepared by professional accountants, and if possible, all filled at the Companies House.
- Good credit history: meaning that all loans are paid and there are no late payments to any of the company’s suppliers.
- Background and CVs of the directors or business owners.
- In case of an investment property, lenders are looking to see a well established formal lease and a responsible tenant. The income must absolutely cover the mortgage payments.
NZ commercial mortgage deals video
The above are examples of some of the criteria and documentation that you will need to provide in order to be considered for the absolute lowest mortgage rates. Remember that, if you are looking for the lowest rates, you should be prepared to offer your lender all the above documents before expecting to receive an answer.
Without a doubt, some businesses are able to arrange some excellent commercial mortgages and as a result to enjoy somewhat lower rates of interest and hence much lower overall interest payments over the life of the mortgage loan. However to achieve this , they have to run thorough market research into the potential lenders. The problem with this approach is that it takes a lot of time and you are already busy running your business. So what is the answer? How can you get the best commercial mortgage deals in NZ?
The easiest way to get the best the best mortgage deals in Auckland
The solution is to go to a broking firm, someone like Global Pacific Finance. They have contacts with many different lenders, some banks, some private and others that are secondary market lenders. They will be able to negotiate on your behalf to find the best commercial mortgages deals in NZ that suit your particular circumstances.