(F) commercial property loan singapore

Best Interest Rate For Commercial Property Loan

[Time-sensitive article with rates which may expire, correct as of 6-Sep-2021]

As a boutique mortgage consultancy firm operating in Singapore since 2014, we’ve always stated our position on commercial property loans (includes industrial property) – where possible, it’s always better to purchase and finance under a company name (investment-holding or operating) rather than under personal name. There are at least three obvious benefits: generally lower rates, potential GST tax savings, as well as keeping your TDSR (total debt servicing ratio) intact for residential properties. Speak to our consultants to find out more.

As complete mortgage advisors, we broker commercial & industrial property loans both for new purchase as well as refinancing. In this article, we present the best financing options for commercial properties in Singapore at the moment – under company name.

Compare All Latest Rates 2021

Lowest Fixed Rate 1.28% For Commercial Property Loan!

(Purchase & refinance under operating company or investment-holding company IHC)

1-YEAR FIXED3-YEAR FIXED
Year 1
1.28% (Fixed)
1.45% (Fixed)
Year 2
3M SORA + 1.30
1.45% (Fixed)
Year 33M SORA + 1.58
1.45% (Fixed)
Year 43M SORA + 1.78
BOARD + 1.50
Year 5 onwards3M SORA + 1.98BOARD + 1.50
Lock-in
2 years3 years
Processing Fee
$1,000$1,000
Legal Subsidy
0.40% capped $3,0000.40% capped at $1,800
Valuation Subsidy
$500$500
Min Loan
$200,000$300,000
Available For
Refinancing & purchase
Commercial & industrial properties
Operating company & IHC
Refinancing & purchase
Commercial & industrial properties
Operating company (IHC at 1.55% Fixed)

With US Fed now expected to bring forward rate hikes due to rising inflation, it may be good time to lock down fixed rate for commercial property loans. These are two of the best fixed rate packages in the market right now, subject to availability (banks typically stop the promotion when fixed tranche for the promotion is used up, so hurry.)

Compare All Latest Rates 2021

In general, other than headline-grabbing interest rates for the initial few years of the loan, we tend to recommend packages with reasonable thereafter rates when the lock-in is over.   This goes against what most brokers will do as they would like owners to refinance instead of staying put with the same bank. However, over at MortgageWise, our philosophy is to work long-term with all clients and we understand the frustrations for most commercial property owners. The problem with most commercial property loans is that the spreads (the mark-up above the loan peg) once lock-in period ends can shoot up to obscene levels like 6.50% when pegged to commercial BOARD lending rates.  This often pose a headache for most companies or business owners who are often at the mercy of banks when it comes to repricing offers, or be forced to pay back the legal fee subsidy (clawback).

(F) hands chained: being locked in or tied up in a home loan

If commercial property owners continue to jump from one lock-in period to another, it becomes very hard to sell off the commercial property at a good price, without incurring a hefty redemption penalty of 1.5% (of the outstanding loan) due to sale within the lock-in period.

Commercial property packages with a more reasonable thereafter rate are especially useful for commercial property owners who are looking to sell their asset at the right price in the short to medium term, especially in a post-covid world where liquidity becomes more important.  Even if they do not sell off the office, retail, industrial or shophouse unit, they could rest easy knowing they are paying what is just slightly above residential home loan rates and not get ripped off big time with thereafter interest rate at 6.5%!

Speak to us now if you have a commercial property loan with interest rates expiring in the next 6 months.

Since 2014, MortgageWise.sg has provided thought leadership in the mortgage planning space in Singapore, seeking to build trust with clients over the longer term rather than product-peddling for quick one-time deals.  So, be it to refinance home loan, or to buy your next Singapore condo, speak to our dedicated team of mortgage consultants here for the best Singapore home loan rates.

Compare All Latest Rates 2021