Buying an office building can provide a lot of opportunities. It adds to the business assets. Provides a permanent place for your business and it can provide overflow space to lease which can help with mortgage payments. Generally to qualify for a mortgage you must own at least 51% of the property. If you are trying to decide whether to continue leasing or buying an office building for your company, checkout our lease vs buy considerations.

Types of Mortgages

Traditional

    This is usually offered by banks in order for you to purchase properties. It is more comprehensive than the other loans with no maximum limits and fit for the long-term. The basic requirement is that it must be owner-occupied and the property value meet the bank’s loan to value requirement. A good credit rating, not lower than 700, is needed and your business must have a good performance for the last 2 years of its operations. In other words, it may be difficult to qualify in this option.

Another option to help with financing a business property loan may be to take out a mortgage on your home. You might want to check out the best of 2019 to find the best lender for you.

SBA 7(a)

Short for Small Businesses Administrations, this type of SBA can be used by business owners to buy different properties assuming the property is owner-occupied. As much as $5 million can be borrowed under this option. This can also be amortized for 25 years with fixed interest rates. Therefore the monthly payment will be fixed until the entire loan is paid in full. To qualify, the property must be owned at least 51%, with a credit score of at least 680 and the business has been existing and performing well in the last 2 years.

SBA 504 Loan

    This type of loan is also good for the long-term because there are no maximum limits. More so, it is comprised of 2 loans coming from banks, which will provide 50% of the total amount and from the Certified Development Company (CDC) to provide 40%. However, the remaining 10% will be provided by you. For example, if you are borrowing $10 million, 5 million comes from the bank, 4 million from CDC and 1 million from you. Like the other options, the property must be owner-occupied at least 51%, with a credit score of 680, and it should be an established business with at least 3 years of operations.

Conduit Loans

    This one is different from other loans as the mortgages are pooled together and eventually will be sold to a secondary market. As expected, the behavior of this loan will also be different. The lowest possible loans amount to $1 million up to $3 million with 10 – 30 years amortization. Likewise, terms of payment are fixed, together with the interest, but it is much lower compared to a traditional mortgage option.

Entrepreneurs starting their ventures in Queensland often look for the best mortgage broker near Brisbane to help them strike a deal with conduit loan lenders. This creates a win-win situation for both parties.

Commercial Bridge Loans

For short-term purposes, commercial bridge loans may be a suitable one until further long-term funding is available. It is supposed to bridge the gap when there is no long-term financing yet, but you need to secure a property. Companies use this in minor projects such as renovations, repairs, and other fixtures. One of the advantages is that you can easily qualify here. You just need to show that you have been successful in the last 3 projects you were involved in, and a credit rating of 700. The amount that you can loan is just equivalent to your net worth. Furthermore, it is also easy to pay since it requires a low down payment.

Commercial Hard Money Loans

    This is similar to commercial bridge loans, however, hard money loans are offered by private companies. It is also for short-term uses such as renovations, small projects, and others that may be closed upon the completion of the project. The qualifications are not that strict compared to traditional loans.You just have to have a credit rating of 600, successful in the last 3 projects, and you should have a proof of downpayment. However, since it is short-term, the interests are higher.

Soft Loans

    This type of loan is like the hard money loans that are intended for short-term uses. The difference is that it bases the approval, not on the down payment, but rather on the strength of the application which is the credit rating. When approved, you may enjoy lower down payment and interest rates, and longer term of payment.

As you can see, when buying an office building there are quite a few options on how to finance it.  You can find out more Information here.

If you’d like assitance in finding and negotiating for an office building to purchase, we have a team of top notch brokers who can help. Contact us today!

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