When you're self-employed and ready to expand your business operations, purchasing an industrial estate can be a significant milestone. Whether you're looking to consolidate your operations, reduce rental costs, or invest in commercial property, understanding how commercial property finance works is essential to making informed decisions.
Industrial estates offer self-employed business owners the opportunity to own their workspace, gain potential capital growth, and claim tax benefits. However, securing a commercial property loan requires different considerations compared to residential lending.
Understanding Industrial Property Loans
An industrial property loan is a type of secured commercial loan designed specifically for buying commercial land or industrial buildings such as warehouses, factories, and distribution centres. These facilities typically come with larger loan amounts than residential properties, and lenders assess them differently.
When you buy an industrial property, lenders will evaluate several factors:
- Your business financial statements and tax returns
- The commercial property valuation
- Your deposit size and commercial LVR (loan-to-value ratio)
- The intended use of the property
- Your business cash flow and serviceability
Most lenders require a commercial LVR of 70% or less, meaning you'll need at least a 30% deposit. However, some lenders may offer different loan structures depending on your circumstances.
Types of Commercial Finance Available
Several commercial finance options exist for purchasing an industrial estate:
Secured Commercial Loan: The most common option where the industrial property serves as collateral. These loans typically offer better interest rates because they pose lower risk to lenders.
Commercial Bridging Finance: If you need to act quickly on a property opportunity or require short-term funding while arranging longer-term finance, commercial bridging finance can provide the necessary capital.
Mezzanine Financing: This secondary form of funding can help bridge the gap between your deposit and the required loan amount, though it usually comes with higher interest rates.
Revolving Line of Credit: Some business owners prefer this flexible option, which allows them to draw down funds as needed and redraw when required.
Interest Rate Options and Loan Terms
Commercial interest rates differ from residential rates and can be structured in various ways:
Variable Interest Rate: Fluctuates with market conditions, offering flexibility and often comes with features like redraw and offset accounts.
Fixed Interest Rate: Locks in your rate for a set period (typically 1-5 years), providing certainty for budgeting and planning.
Many self-employed borrowers choose a split loan structure, combining both fixed and variable components to balance stability with flexibility. Your business loans specialist can help determine which approach suits your situation.
The Application Process for Self-Employed Borrowers
As a self-employed person, you'll need to provide more documentation than traditional employees. Lenders typically require:
- Two years of business tax returns
- Two years of personal tax returns
- Business financial statements (profit and loss, balance sheet)
- Bank statements showing business cash flow
- ABN registration and business licences
- Details of existing business debts and obligations
Working with a Commercial Finance & Mortgage Broker like Mortgage Path gives you access to commercial loan options from banks and lenders across Australia. This wider reach increases your chances of approval and may result in more favourable loan terms.
Strata Title Commercial Considerations
Some industrial estates are strata title commercial properties, meaning you own an individual unit within a larger complex. Strata properties can offer more affordable entry points for self-employed buyers but come with additional considerations:
- Body corporate fees and special levies
- Restrictions on business activities or modifications
- Shared facilities and common areas
- Voting rights on complex decisions
Your commercial property valuation will reflect these factors, and lenders may have specific policies regarding strata industrial properties.
Additional Commercial Loan Features
Modern commercial property loans often include flexible loan terms and flexible repayment options:
Progressive Drawdown: Useful if you're purchasing land and constructing a facility, allowing you to draw funds as construction milestones are reached.
Pre-Settlement Finance: Helps manage cash flow during the settlement period when you may need to vacate existing premises or manage dual occupancy.
Principal and Interest vs Interest-Only: Choose repayment structures that align with your business cash flow and tax planning strategies.
Beyond Purchase: Expanding Business Operations
Once you've secured your industrial property, commercial finance can also support other business needs:
- Buying new equipment for your operations
- Upgrading existing equipment to improve efficiency
- Commercial construction loan for fit-outs or modifications
- Commercial development finance for expanding your facility
Our equipment finance and asset finance options can complement your property purchase, allowing you to establish a fully operational facility.
Commercial Refinance Opportunities
As your business grows and your property increases in value, commercial refinance options may become available. Refinancing can help you:
- Access equity for business expansion
- Secure better interest rates as your business strengthens
- Consolidate business debts
- Switch to more suitable loan structures
Regularly reviewing your commercial loans ensures you're always positioned to take advantage of opportunities.
Why Use a Commercial Mortgage Broker
Purchasing an industrial estate involves complex financing arrangements. A specialist broker provides several advantages:
- Access to multiple lenders including those not available to the public
- Understanding of how lenders assess self-employed borrowers
- Expertise in structuring loans for tax efficiency
- Ongoing support through commercial refinance and future funding needs
- Knowledge of warehouse financing, retail property finance, and other commercial real estate financing options
At Mortgage Path, we understand the unique challenges self-employed Australians face when buying commercial property. Our experience with commercial property investment means we can guide you through land acquisition, property purchase, and ongoing business property finance needs.
Purchasing an industrial estate represents a significant commitment but can provide substantial benefits for your business. With the right commercial property finance structure and professional guidance, you can secure the facility your business needs to thrive.
Ready to explore your options for buying commercial property? Call one of our team or book an appointment at a time that works for you. Let's discuss how we can help you secure the right commercial mortgage for your industrial property purchase.
