ProInvestor
New Contributor
It's very normal. it can be difficult to get more than a 70% LVR lend on commercial, even with a 10x10x10 lease.
Interest rates are also higher on commercial (this is standard). Usually one pays 1.5% differential (meaning commercial rates are 1.5% higher than residential).
It's pretty much the same everywhere: US, Australia, UK, NZ, Canada. The US market could get higher LVRs (or LTV for our American friends) but with subprime disaster apparently it's a lot harder than before.
The reason banks demand higher equity/down payment and interest rate is that commercial property can be very difficult to sell (and to value even), where as residential can be very easy (one just has to discount the price until it sells).
Usually loans are between 3-15 years renewable, which basically means after the 3 year term comes up it get 'renewed' for another 3 year term (this happens usually automatically).
Interest rates are also higher on commercial (this is standard). Usually one pays 1.5% differential (meaning commercial rates are 1.5% higher than residential).
It's pretty much the same everywhere: US, Australia, UK, NZ, Canada. The US market could get higher LVRs (or LTV for our American friends) but with subprime disaster apparently it's a lot harder than before.
The reason banks demand higher equity/down payment and interest rate is that commercial property can be very difficult to sell (and to value even), where as residential can be very easy (one just has to discount the price until it sells).
Usually loans are between 3-15 years renewable, which basically means after the 3 year term comes up it get 'renewed' for another 3 year term (this happens usually automatically).