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A commercial real estate loan is a long-term mortgage that provides you with the money you need to buy commercial real estate. The property can be an investment where you rent it out, the premises of your business, or you can use the money to help finance or support your business. Whatever the purpose, the process of applying for a commercial or commercial mortgage is not as straightforward as a residential mortgage. Interest rates and terms for commercial mortgages can also vary widely from lender to lender. If you are currently looking for a commercial mortgage, having an experienced commercial mortgage broker on your team can help you get a good deal. They can also guide you through the process, saving you valuable time.
How will having a commercial mortgage broker benefit me?
A commercial mortgage broker is a financial specialist focused on obtaining commercial and commercial loans for their clients. When looking for a commercial mortgage, you may find that it is more difficult for a business to meet the eligibility criteria than it is for a personal mortgage. It is often difficult for a lender to assess your repayment capacity as a business. You would likely have a consistent spending and income model that works to pay off your mortgage as an individual. But as a business, your finances can fluctuate more often, making business loans riskier for lenders than residential real estate loans.
This higher risk means that you will be asked to provide more documents to convince a lender that you will be able to repay the loan. A good commercial mortgage broker can simplify this process. They will help you by preparing and filing the application on your behalf and negotiating a potentially better rate than that advertised by the lenders.
How Do I Pick the Right Commercial Mortgage Broker?
With hundreds of commercial mortgage brokers in the market, it’s natural to feel overwhelmed. But finding an experienced broker to guide your real estate journey doesn’t have to be complicated. By doing a little research beforehand and following a few tips, you will be able to find the right trading broker for your purchase.
1. Find all relevant licenses
The first and most important thing to check is whether a broker is licensed to work as a mortgage broker or not. The minimum requirement for working as a mortgage broker is an IV certificate in mortgage finance and brokerage.
In addition, they must be an active member of the Finance Broker Association of Australia (FBAA), the Mortgage and Finance Association of Australia (MFAA) or the Mortgage Industry Association of Australia (MIAA). These requirements are the same for residential and commercial mortgage brokers.
However, a commercial or commercial mortgage broker will have specialized practice and experience in brokering commercial and commercial loans. They may have a complementary diploma or specialized training in commercial brokerage. This puts them in a better position to guide you in your commercial real estate purchases.
You should also ask any broker for their Australian Credit License (ACL). As ACL holders, brokers work under the National Consumer Credit Protection Act (NCCP). This forces them to recommend only suitable products to you, based on a reasonable investigation of your financial situation.
2. Check their experience and user reviews
In addition to confirming qualifications, you want your mortgage broker to be approachable and easy to work with. Referrals from people you know and testimonials on a broker’s website or social media can give you an idea of ​​their working style.
At RateCity, we bring you a panel of verified mortgage brokers dealing with residential and commercial mortgages. Depending on your location and needs, we can put you in touch online with an experienced mortgage broker. We’ve also implemented a transparent feedback system so you can read what other users have to say about the mortgage brokers on our panel.
3. Additional checks
In addition to the above, it would be a good idea to verify that the mortgage broker is registered with the Australian Securities and Investments Commission (ASIC). Another thing to check is if they are registered with an external dispute resolution system approved by ASIC, such as the Australian Financial Complaints Authority (AFCA).
Benefits of working with a commercial mortgage broker
If you are thinking about financing a commercial property, hiring a commercial mortgage broker can save you a lot of hassle and money as well.
When you apply for a commercial mortgage yourself, you can spend a lot of time identifying the right lender. It may seem unnecessary if this lender does not approve your request. Or the approval process takes a long time, but you need to get funding fast. A commercial mortgage broker can help you in these situations by submitting your application to lenders who are more likely to approve it. They can take into account if you need the financing quickly and help speed up the process to get you the money as quickly as possible.
Interest rates and other fees associated with commercial or commercial real estate loans tend to be higher. If you can get even a small discount, you can save a significant amount of money in the long run. A good commercial or commercial mortgage broker can help you compare apples to apples to choose the cheapest and most suitable mortgage deal for you. Sometimes business brokers get exclusive special offers from certain lenders because they have been working with them for a long time and bringing in a lot of business for them. Brokers will often pass these savings on to you, giving you access to cheaper interest rates and other discounts.
A commercial mortgage broker can also save you time and money by letting you take advantage of their relationships with other industry professionals. For example, a seasoned commercial mortgage broker will have a network of reliable professionals, including accountants, lawyers, and appraisers to refer you to.
How is a commercial mortgage broker paid?
Most commercial mortgage brokers earn an upfront commission and a trailing commission for the business that they bring to a lender. The amount is usually based on the size of the loan and other factors. This means that you have free access to the services of an expert mortgage broker.
A trailing commission is paid to good mortgage brokers because they shouldn’t just be providing you with one-time service. They should continue to work with you to make sure the loan is still the right one for you. This could mean refinancing the loan at a later date or simply restructuring it. Lenders typically compensate them for the quality of the business they bring in and for managing relationships with borrowers to minimize defaults. This is a win-win situation for you because a broker who does their job well will make sure that you get a loan that doesn’t cause you financial stress.
Overall, working with a commercial broker who has a relationship with a wide range of lenders improves your chances of getting approved and getting a competitive deal on your commercial mortgage. Mortgage brokers are also required to work in your best interests, which means they must come to an agreement that does not put you in a bad financial position. If you are looking for a commercial or commercial loan, you may want to consider speaking with a specialist broker to learn more about your options.
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