Commercial Financing at Home Loan Rates
It’s been a long time coming, but now you can use your residential property for commercial financing without the rate penalty.
Typically, in the past, if you were to use a residential property for “commercial purposes” the bank would say yes, even though it’s residential, the purpose is commercial financing, so we’ll charge a “commercial” rate which has typically been a higher rate than your typical home loan rate.
This started to change about 4-5 months ago when ING made their Mortgage Simplification Fee for use in commercial property financing. So if 40% of the purchase price was coming from residential financing and 60% was at commercial financing rates, it was much more competitive. The 30-year loan term with 5-year interest is also more attractive with this type of loan, because the average repayments are lower, however, if you want to pay more, you can.
Then, in the last month, another dominant institution has allowed its best residential rate (6.47% as of 06/15/10) to be used to purchase commercial property. It is currently around 0.9% below the standard floating rate of major banks. Then all of a sudden, using your residential property for business financing just became a lot more attractive.
So if you’re financing a commercial property and have some residential capital, there’s never been a better time to consider your options. Both from the perspective of a better rate, as well as longer, hassle-free interest terms, as well as no annual reviews, etc., it’s worth looking into.
