Realistic valuation can help secure that loan you need
OPINION: Sometimes it can be daunting approaching the bank for a loan but did you know there are things you can do to better your chance of being approved?
Here is my weekly tip for business and commercial property investors to help you prepare for a positive outcome.
Think about what you are offering as security.
The bank will need to obtain a valuation of the properties being taken as security and will rely on the valuers' recommendation as to what the property is worth. We have no control over this.
If you are purchasing a property it is a good idea to do your research on current market values.
If the property is vacant and your intent is to be investment only, be sure to check how long it has been since it held a tenant.
Be realistic about the value of your existing property.
Over estimating the value won't help as the valuer will override your estimate anyway and this may cost you unnecessary money in valuation fees.
Generally speaking bank's will offer better rates for residentially secured business loans, so if buying a commercial property and you have a residential property or two it is worth an ask to your business banker what rate would be offered if residential security is thrown into the mix.
Banks can also split the loan so that the residentially secured portion is on the cheaper rate which can save you quite a bit in interest expense over the life of the loan. Watch this space for next week's tip.
Mark Moller is the business banking manager for Wide Bay Australia. Visit www.widebayaust.com.au.