Question 1

Are business mortgages the same as home loans?

Accepted Answer

Home loans are for residential dwellings. A business mortgage is for financing property used for commercial purposes. Similar loan structures apply, but the way applications are assessed, rates and terms can vary. Where a business operation is included in the sale, the earnings potential of the operation can be considered by lenders.

Question 2

Is the interest rate on a business mortgage fixed or variable?

Accepted Answer

Both fixed and variable rate commercial property loans may be available, depending on the interest rate cycle and lender products available at the time. Fixed rate loans are typically available for 1-5 years after which the borrower needs to refinance the loan.

Question 3

Are business mortgage payments tax deductible?

Accepted Answer

The interest portion of repayments on business loans is usually a tax deduction. Buyers are advised to check with the ATO or their accountant on the tax benefits of their commercial property loan.

Question 4

Is equipment sold with a business included in the mortgage?

Accepted Answer

Equipment that forms part of the sale of a commercial property is typically financed with a separate loan arrangement. Subject to individual circumstances, some lenders may approve a finance package for the complete purchase â€“ property and assets.

Question 5

Is stamp duty applicable to a business mortgage?

Accepted Answer

Stamp duty is applicable to property transactions. The tax would apply to the value of the property part of the commercial property purchase.

Question 6

What is the loan term for commercial property finance?

Accepted Answer

Terms for commercial property loans will depend on individual applications, loan products and the lender. A fixed rate loan term is typically 1-5 years.

Question 7

Does the use of the commercial property affect the loan?

Accepted Answer

Lenders may assess the use of a commercial property in regard to earnings potential. Lenders may consider this potential when assessing the risk of lending on that type of property. The assessed risk may affect the interest rate offered.

Question 8

Are freehold and leasehold loans the same?

Accepted Answer

Loans for commercial property freeholds and leaseholds can differ. A freehold would typically be considered a more secure purchase than a leasehold. The length of a lease would be considered in lender assessments of individual applications.

Question 9

Is Lenders Mortgage Insurance applicable to business mortgages?

Accepted Answer

Where borrowers have less than the standard 20% deposit for a commercial property loan, Lenders Mortgage Insurance would apply.

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