A commercial loan is useful for business people, as it allows them to raise capital against the business property itself. They might not want to raise the capital against the residential property, so this is a great option for them. Today, though, some institutes allow you to use your home or residential property as collateral so you can raise the required business investment.
Commercial loans are taken when the business person is in need of funds and sometimes even though they have enough personal assets and income they cannot use it because of tax minimisation. In such a case, the option is to take a loan against the company property. Nowadays, you can even apply for a low doc loan. They even allow you to take a commercial loan against the residential property. Commercial loans also are many times not taken out on the name of the individual, but are generally on the name of the limited company, partners or the incorporated business and, in such cases, calculating the credit worthiness can be a little complicated.
Why do I require a Commercial Loan?
As per the Credit Act, you have to declare the reason for application of a commercial loan. Listed below are a few of the acceptable ones:
o For investing in business
o Purchase of home (owner owned)
o Financing holiday
o Personal use vehicle
o Consolidated personal use
Low Doc Commercial Loans
Low doc loans are called non-conforming loans and they are the latest development in the mortgaging industry. These are especially helpful to those individuals that have a steady income and also have assets, but can t show them or use them because of tax benefits. In such cases a low doc loan is a good option. A low doc commercial loan does not require the borrower to show tax returns, business plans, cash flows, accountant recommendation, budgets, etc. Most institutes don’t even considers your income or apply gearing ratios when considering your loan application. It would be advisable if you speak clearly with your financial institution and get all the information on whether you can get a low doc commercial loan or not. You need to declare the reason for applying for a commercial loan.
Rate of Interest
Rate of interest keeps fluctuating as per the market conditions, though commercial mortgage rates are generally fixed. The rate on interest on a commercial mortgage is higher than the one on a residential mortgage. Mainly there is a fixed rate of interest for a number of years, which varies depending on your needs. Maximum term is around ten years and should not be confused with a residential term of 30 years.
A second mortgage is taken as an additional loan on the commercial property, which is already secured behind the first lien. The rate on interest on the second mortgage is higher than the first one, as the risk of non payment goes up.
If you are looking for a commercial loan, you could consider the name Fuss Free Finance. Their professional approach to handling your loan will leave you stress-free and relaxed. Please check out their website at http://www.fussfreefinance.com.au.
Ricardo Salazar is a financial services consultant involved in the field for 15 years. He specialises in consultation for Business and Personal Loans. Please Visit http://www.fussfreefinance.com.au.
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