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Commercial
Buying your own premises, or a building with tenants, is lent on very different rules from a home loan. The rent, the lease and the tenant matter as much as you do.
By Yatin Kainth, Financial Adviser FSP1007497. Last reviewed
Short answer
Commercial property loans in NZ usually fund 50 to 70% of the property’s value, over shorter terms than home loans, with rates set above residential rates. Lenders test whether the net rent covers the interest, often by 1.5 to 2 times, and look closely at lease length and tenant strength. Owner-occupiers are assessed on business income instead.
Net yield
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Max loan by LVR
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Max loan by interest cover
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Likely maximum loan
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Deposit needed
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Indicative only. Lenders also look at lease terms, tenant quality, building condition and your other assets. Owner-occupied premises are assessed on business earnings instead of rent.
If your business will occupy the building, lenders look at your business accounts and whether the business can pay the interest and principal. If it's leased to others, the rent does most of the work. Many owners set up a separate entity to own the property and lease it to their business. Talk to your accountant about the structure first.
Usually 30 to 50% of the purchase price. Strong leases and tenants can reduce it.
Often 15 to 20 years, with the facility reviewed every 3 to 5 years, unlike 30-year home loans.
Yes. Many buyers use home equity to reduce the cash deposit. It increases the risk to your home, so plan carefully.
Yes, typically by 1 to 3%, depending on the property, lease and lender.
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