Become your own landlord
Why pay off someone else’s mortgage when you could be paying off your own?
If you’re a business owner, at some point you’ve probably stopped to wonder whether you might be better off investing in your own premises. Or maybe you're looking to acquire a business?
There's plenty to weigh up and it helps to have an expert on your side to walk you through the process.
How Squirrel can help you as a business owner
Better interest rates
We compare all the banks and get you the best rates. We also normally get better than the advertised rates.
Expert advice
You'll get your own dedicated mortgage adviser who's an expert in commercial lending to find the best solution for your needs.
More options
We work with all the main banks and have our own lending solutions too, giving you more options to choose from.
Benefits of buying an owner-occupied commercial property
You’re never going to be at risk of being hit with surprise rent hikes or not having your lease renewed because the owner decides to sell.
Should your business run into financial trouble, you can choose to sell with a lease-back option – where you remain on as the tenant. Not only will that give you a cash injection, but having a tenant already locked in is a huge plus to any potential buyer.
If you’re not using the full space, you also have the option of getting other tenants in as a little side-earner.
When the time comes for you to get out of the business, you can hold onto the building and lease it to the new business owner (or someone else) providing an income stream into retirement.
Meet our commercial lending experts
We've got your back when it comes to buying commercial property and business acquisition funding. Our team of experts is happy to chat to you about your needs, whatever they may be.
Squirrel work with all the banks
So you can get the best deal for your business and your lifestyle
Get your mortgage structure right and it's the easiest money you'll make
Our team of expert mortgage advisers are whizzes at perfecting a mortgage structure that works with your business.
Typically, the loan will be split between the property-owning entity and the operating entity on a 65%-35% basis.
The majority of the loan, that 65% held by the property-owning company, is secured against the property itself. This portion of the loan will usually be structured on a 15-year amortising basis, or potentially interest only in some circumstances.
The remaining 35% would be an unsecured loan on a cashflow-type basis, to be paid off over five years. Lenders will want to see evidence of strong cashflows and a good, solid balance sheet for your operating business, so they know you’ll be able to meet the repayment schedule.
Why bother getting so technical?
The devil is really in the detail. When we’re talking hundreds of thousands of dollars, a fraction of a percent change in interest or repayment rates can save you a packet. This could mean retiring to your super yacht a few years earlier than planned. If that's your thing.
Your might need less deposit than you think
If you're buying as owner-occupied commercial property, you'll need a lot less deposit than if you're buying it as an investment.
- When buying a commercial property for investment purposes, you’ll need to front up with between 35% and 60%, depending on the type of property in question and lease profile.
- When you’re buying as an owner-occupier, banks are willing to lend up to 100% of the value of the property, if cashflows are strong and reliable and the balance sheet is well capitalised.
Things to consider when buying commercial property
Your existing lease
Can you get out of your current arrangement? How much notice do you have to give? And what costs might be involved?
Moving in costs
What will it cost to move from your current premises to the new location?
Existing tenants
Is the property vacant? If there are tenants in the building, what are the terms of their lease?
Do your due diligence
Check things like the earthquake rating of the property, which should ideally be 67% or higher.
What sort of interest rates apply to commercial property loans?
The stronger the financial position of your business, the better the rate you’re going to get.
That said, lenders are competitive in this space, given they have the property as security. An indicative rate right now would be somewhere between 8.50% and 9.00%, subject to change over time and depending on your situation.
The same rate is usually applied across both parts of the loan, with a premium factored into the equation to account for the unsecured portion. The more unsecured debt there is, the higher the rate will be.
Sometimes the lender will set separate rates for the different parts of your loan, in which case the unsecured portion of the loan will be more expensive.
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Thinking of buying a commercial property for your business? Here’s what you need to know
If you own your own business, chances are you've stopped to wonder at some point whether it's worth investing in your own premises. Here's what you need to know if you're thinking about buying owner-occupied commercial property.
Don’t just take our word for it
Raj
New Zealand
Jessica was/is absolutely a pleasure to work with. She works 100% for her clients, a no-nonsense person with precise recommendation. Thank You Jessica
Jo
New Zealand
Highly recommend Squirrel to sort out a mortgage with the banks takes the hassle out of going to separate banks with so much information they do the hard yards for you - Baz was a superstar and helped me all the way to my new home.
Kat
New Zealand
My Adviser Cade was so awesome!! He was very knowledgeable and made the whole process very easy for me. I am also really happy with the mortgage deal he got for me and how quickly everything was arranged and completed. Will definitely be using Squirrel again.
Anonymous
New Zealand
Very happy with Jessica Carr! Easy to talk to and always happy to answer questions.