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Is it possible to apply for a commercial loan when investing in a block of 6-8 units (residential tenancy, units registered together as one). I understand there would be a lower LVR in this scenario but just wondering if this is possible.
Would a commercial loan take into consideration my own serviceability from my own personal income?
Thanks.
Responses
Hi PM,
The answer is yes. Based on the fact that you've mentioned 'commercial' I'm sure you've discovered that the max number of units a resi lender would take on one title is four.
What a commercial lender will do when valuing the unit block is give you an 'all in one line' valuation. This means that the value will be based on if they had to sell the whole block at once. If that was the case, the average punter wouldn't be able to buy the whole block, only really developers could so your market would be limited, hence you'd get a lower valuation using the 'all in one line method.'
In saying that though, most commercial banks would still be happy to fund it.
Yes, a commercial lender would factor in your own personal income. In a best case world, their general rule of thumb is that rental income from the block should equal one and a half times the loan repayments. If it failed to achieve that, they'd then look at your personal income as a way to mitigate their risk.
Hope that helps, if you want to talk further, feel free to get in contact.
Kind regards,
Tim Russell
Multipart Finance
(m) 0400 530 868
(e) tim@multipartfinance.com.au
(w) www.mulitpartfinance.com.au
Hi P M,
It may be possible, you would need to provide a bit more information. Are you constructing the units or buying them as a rental income proposition? Are you a builder yourself?
In terms of servicing you can use all verifiable income that is clearly yours such as wages, distributions, investment income and rents.
Sit down with an experienced broker with both Commercial and Residential knowledge and they will take you through your options once they understand more about the deal and your financial position.
Best of luck
Scott