Its been a long time coming, but you can now use your residential property for commercial finance without being penalized on rates.
Generally in the past, if you were to use a residential property for “business purposes”, the bank would say well – even though it is residential, the purpose is commercial finance so we will do a “business” rate which has generally been a higher rate than your typical home loan rate.
This started to change about 4-5 months ago with ING doing their mortgage simplifier rate for use in financing commercial property. So if 40% of the purchase price was from residential finance, and 60% was at commercial finance rates, it was much more competitive. The loan term of 30 yrs with 5 yrs interest only is also more attractive with this type of loan, because average repayments are lower, however if you wish to pay more you can.
Then in the last month, another mainstream institution has allowed their best residential rate (6.47% as at 15/06/10) to be used to purchase a commercial property. This is currently about 0.9% below the standard variable rate of the main banks. So suddenly using your residential property for commercial finance became a whole lot more attractive.
So if you are financing a commercial property, and have some residential equity, there has never been a better time to consider your options. Both from the perspective of a better rate, as well as the longer and hassle free interest only terms, as well as no annual reviews etc, its worth looking into.