Three buyers can want the same commercial property and need different loans. One has complete business accounts. Another has current trading records but unfinished financials. A third is buying a leased investment and wants the rent to support the assessment.
La Trobe Financial has separate commercial products for those different evidence routes. The useful starting point is which income supports the transaction, rather than choosing the product with the simplest name or lowest advertised rate.
Full Doc: use the financial records you have
Commercial Full Doc covers eligible purchases and refinances of commercial property, including shops, offices and light industrial assets. It is intended for borrowers who can fully verify income, whether employed or self-employed.
If your financial records are current, include this route in the comparison. You should not assume that a non-bank application needs alternative documentation, or that fewer documents necessarily produce a better result.
Have the broker identify the exact evidence required for your income and structure. A set of completed accounts can answer one part of the assessment while leaving questions about existing debt, guarantees or the proposed property.
Lite Doc: different evidence for business income
Commercial Lite Doc is aimed at self-employed borrowers. Its public product summary specifies an accountant letter and borrower declaration for income verification.
This may be worth investigating if the business can support the debt but a full-doc application does not fit the available records. Ask exactly what the accountant is being asked to confirm and whether the available information supports that request. Alternative documentation is still evidence of income, not permission to borrow on an unsupported estimate.
Before asking your accountant to prepare a letter, confirm the required format and what it needs to establish. The letter should reflect information the accountant can properly support.
Lease Doc: start with the tenancy
Commercial Lease Doc uses the current lease as its primary income evidence. It can be relevant to an investor buying or refinancing a property leased to a third party.
A lease is more than the headline rent. The lender needs to consider the proposed transaction against its requirements. For your own decision, understand who pays the outgoings, whether incentives reduce cash receipts and when the lease expires. Your solicitor should review the legal position.
If your own business will occupy the property, do not assume an internal lease creates the same assessment route as an independent tenant. Ask which product applies to that occupancy and how repayment capacity will be tested.
The fee can change the comparison
The published commercial product summaries list an application fee starting at 1.25% of the loan amount, excluding valuation and legal costs. On a hypothetical $1 million loan, 1.25% is $12,500 before those other costs. That is an illustration of the percentage, not a quote.
A fee of that size deserves attention alongside the rate. If one option has a lower rate but a higher entry cost, the better choice can depend on how long you keep the loan. Ask for the upfront cash requirement, ongoing charges and costs of selling or refinancing during your expected holding period.
The published Full Doc, Lite Doc and Lease Doc products have maximum loan-to-value ratios (LVRs) of 75%, meaning the loan as a percentage of the lender's property valuation, with loan-size tiers and security conditions. Budget using the amount actually available for the property. Leave room for a lower valuation and transaction costs, rather than treating the maximum as an approval.
Make the shortlist around the transaction
Start with a short description of the property, who will occupy it, which entity will borrow, the amount needed and the records supporting repayments. Ask which La Trobe route fits, then compare it with other suitable commercial offers on the same loan amount and term.
Our commercial loan documentation guide explains the wider options. Flexdoc can help assess the lending route and total costs; La Trobe Financial remains the lender and makes the credit decision.
General information only. Your circumstances have not been assessed. Lending criteria, terms, fees and approval apply. Seek appropriate tax and legal advice.