Benefits For Borrowers
Sydney Morning Herald
Saturday December 9, 1995
The recent development of mortgage securitisation programs has generated significant benefits for home loan borrowers and investors by delivering greater choice, flexibility of loan products and lower interest rates.
In contrast, purchasers of commercial property have been required in the past to pay several percentage points more interest and have received little flexibility in their loans. This should not be the case - and it is changing.
There is no longer any necessity for those wishing to finance commercial properties, whether for purchase or for the refinance of existing loans, to follow tradition by paying several percentage points of interest above the average home loan rate on loans secured by commercial property.
This is a welcome change in the commercial property lending market.
The change is occurring as non-bank lenders reassess the market and find they can offer more competitive rates on commercial property than have traditionally been offered by the major banks. Lower rates from non-bank lenders do not mean less secure sources of funds.
Through its OPAL (Originated Prime Australian Loans) mortgage program, AIDC is one of the first non-bank lenders to provide greater flexibility and lower interest rates to commercial borrowers by offering interest rates generally ranging between 9 and 10 per cent a year on commercial loans.
The development of more flexible and lower rate commercial property mortgage finance means individuals and companies now have access to funds to purchase or refinance commercial property such as shops, offices, showrooms, warehouses and factories at the lower interest rates normally only available for home loans. Loans can be arranged anywhere in Australia on the property being purchased, on homes or a combination of both.
Like home loans, commercial borrowers may now choose interest-only, long-term reducible, or the loan may be a combination of both. Interest rates may be fixed, variable or a combination of these. Borrowers are given the opportunity to select a structure that best suits their requirements.
Non-bank lenders are able to provide lower rates as they do not have the costly branch networks that the banks have to service.
© 1995 Sydney Morning Herald