Going straight to the bank will avoid using an intermediary and circumventing an intermediary will save money. While this logic makes sense on some levels, you might be surprised to learn that you can save money by using a broker to help you with your commercial property loans.
In this post, we’ll take a close look at commercial loans. We’ll also investigate how you can save money by using a broker instead of going straight to the bank. Let’s get started.
Ways to Find Loans
When searching for a commercial loan, you have three options:
- Go directly to the bank
- Shop around yourself
- Get a broker to shop around for you
Let’s start with the bank.
Going Directly to the Bank
It can be convenient to work with a bank where you already have an account with, but that doesn’t necessarily mean you’ll have a smooth loan process or the product or the structure is the most suitable for your requirements. In fact, because most banks divide responsibilities up among many different people, it’s all too common for loan applications to fall through the cracks and stall.
Shopping Around Yourself
How much time do you have for researching lenders and establishing new relationships? With all the other details involved with property loans, do you want to spend all your time on the phone gathering information about interest rates, loan requirements and fees? Most people don’t have the time it takes to seek out the most appropriate loan for their projects, nor do they have contacts within the lending business who can help them find what they’re looking for.
Getting a Broker to Shop Around for You
With a broker, you get customised help to find the best loan for your commercial investment property. A good broker already has many contacts in the lending industry and can zero in on the best fit for you. The just-right loan can actually save you tens of thousands of dollars over the life of the loan.
How a Mortgage Broker Gives You an Edge
Clearly, a broker can save you time and help you to get the best loan for your commercial property. In this section, we’ll look at some of the specific benefits you’ll gain from leveraging a broker’s expertise.
Brokers Get Superior Rates
With over 40 lenders in Australia, the competition for loans is steep. Lenders want to acquire trustworthy loans, and they depend upon brokers to bring them. Because of this, lenders offer discounted interest rates to brokers they like to work with, and you can be the beneficiary of these low rates.
When you approach a bank as an individual, you’re going to get a standard rate. Even if you have an existing relationship with the bank because you use it for your checking or savings account, they don’t have much incentive to offer you a low, low rate. Use a great broker, though, and the banks will dip their rates to increase volume through your broker.
Brokers Provide a Range of Options
Banks can only offer their own loan products, which may or may not be well-suited to your project. Moreover, with dozens of lenders to choose from, you’re probably not going to shop around to very many.
A broker, on the other hand, has easy access to a panel of lenders and many different loan products. Somewhere in all of these options is the perfect loan for you. Your broker can save you a great deal of time as well as unnecessary pings against your credit when you apply for loans you don’t qualify for.
Brokers Know Credit
Bank policies are very black-and-white. Generally speaking, you won’t find much nuance when it comes to credit issues and bank loans. Complexity usually leads to delays when you’re working with a bank, and real estate delays never end well.
Brokers, however, know that the difference between getting approved and getting rejected can come down to the presentation of your loan application. They have the expertise to identify policy exceptions and can negotiate with the loan officer handling your loan.
Brokers Have to Earn Your Trust
A bank has no stake in whether or not you get your loan, so the loan process can drag on and on. And while there’s comfort in working with an institution that’s “too big to fail,” the personal touch is often missing.
All loan brokers in Australia must hold a current Australian Credit Licence (ACL) or be a credit representative under a wholesaler licence. They have every incentive to find the perfect loan for you. After all, if they serve you well, you’ll probably return for help with your next investment property. Or maybe you’ll even refer them to your friends and associates.
It’s comforting to have someone in your corner who has your best interests in mind and will see the process through. Your broker makes it possible for you to focus on other priorities, such as finding your next investment property or working on renovations.
What’s It Like Working with a Broker?
When you work with a broker to find your next commercial loan, you’ll discover the power of having an expert on your team. Start with a consultation to get to know the broker and find out if you work well together. To set up a time to talk with one of our DJB loan experts, reach out to us. We’re happy to answer your questions and assist you with achieving your commercial investment property goals.