(F) commercial property loan singapore

Best Interest Rate For Commercial Property Loan

[Time-sensitive article, correct as of 2-Nov-2020] 

It’s not always that we talk about commercial property financing (including industrial properties) in this blog.  However, we just got to shout about this ridiculous commercial property financing package at 0.69% by one major lender – that’s even below that of residential home loans!

Compare All Latest Rates 2020

Ridiculous Rate 0.69% For Commercial Property Loan!

3-month SIBOR now at 0.40482 (as of 26-Oct-2020) 

SPECIAL COMMERCIAL PROPERTY LOAN PACKAGE
Year 1
3M SIBOR + 0.28 (Start at 0.69)
Year 2
3M SIBOR + 0.28
Year 33M SIBOR + 0.58
Year 4 onwards3M SIBOR + 0.88
Lock-in
2 years
Processing Fee
$1,000
Legal Subsidy
0.40% up to $3,000
Valuation Subsidy
$500
Min Loan
$300,000
Available For
Refinancing only
Commercial & industrial properties
Operating companies (Singapore-registered)

First and foremost, to qualify for this promotion, the commercial or industrial property must be owned by an operating company with a core business other than collecting rentals.  This means that investment-holding companies (IHC) do not qualify for this promotion (Fret now, we also have other excellent rates for IHC starting from around 1%)

Compare All Latest Rates 2020

What we like about this package is not just the headline-grabbing interest rates in the first two years of the loan.  The thereafter spread from the third year onwards is superlative with the final rate hovering in the 1.0-1.30% range!  The problem with most commercial property loans is that the spreads after the lock-in period ends can shoot up to obscene level like 6.50% when pegged to commercial BOARD lending rates.  This often pose a headache for most companies or business owners who are often then at mercy of banks when it comes to repricing offers, or be forced to pay back the legal fee subsidy (clawback).

If they 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.

With a more reasonable thereafter rate even after the lock-in period of two years, this package is good for commercial property owners who are looking to sell their asset at the right price in the short to medium term.  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 4.0-6.0%!

Speak to us now if you have a commercial property loan with interest rates expiring in the next 6 months.  This could not come at a better time.  And with SIBOR expected to stay in the doldrums for years to come (read our forecast), not only is the headline interest rate “ridiculously-low”, the thereafter spreads of a mere 0.88% (from year 4 onwards) makes for a reasonably comfortable holding period.

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 2020