Refinanced a $3,170,000 commercial property for clients who were being penalised from their existing bank during an annual review of their facility by being charged a much higher interest rate to renew their facility. The commercial property was made up of 2 ground level shops and an upstairs reception lounge/restaurant. All 3 were tenanted out with new 3 years leases. Background to the transaction was that the clients income was greatly affected during Covid lockdowns as 2 of the 3 tenants businesses were completely closed for months and were paying no rent. As a result the clients financials were not as strong as previous years and hence their bank risk rating was negatively impacted which in turn meant an increase in interest rate.
Outcome was a $3,000,000 refinance to a new lender under a lease doc product for the commercial property. This product uses only the current leases that are in place as income, however is capped at a maximum $3,000,000 loan. The remaining $170,000 was refinanced using the clients residential property, which the original bank was also holding as security, under a low doc loan plus a cash out of $330,000 for renovations to both the commercial and residential properties. As a result the clients saved over 2% annual interest by refinancing the commercial portion, and were on the same rate for the residential portion.