Best Interest Rate For Commercial Property Loan
(Last Updated: 3 Jan, 2025)
Commercial Property Loan – Under Company or Personal Name?
We’ve always stated our position on commercial property loans (includes industrial property loans) – where possible, it’s always better to purchase and finance under a company name be it for investment-holding or an operating company with a core business. There are at least three obvious benefits:
- Generally lower interest rates
- Potential for GST tax savings where you can do GST pre-registration
- Reserve your TDSR (total debt servicing ratio) capacity for more residential properties.
As your complete mortgage advisors, other than brokering for residential home loans in Singapore, we also 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 (under company name) in Singapore at the moment.
Lowest 2.40% Fixed (Min $500k)
Lowest Rate 2.60%Fixed For Commercial Property Loan!
(Purchase & refinance under operating company or investment-holding company IHC)
| FLOATING | 2-YEAR FIXED | |
|---|---|---|
| Year 1 | 3M SORA + 0.70 | 2.60% (Fixed) |
| Year 2 | 3M SORA + 0.70 | 2.80% (Fixed) |
| Year 3 | 3M SORA + 2.00 | 3M SORA + 3.00 |
| Year 4 onwards | 3M SORA + 2.00 | 3M SORA + 3.00 |
| Lock-in | 2 years | 2 years |
| Processing Fee | $500 | $1,000 |
| Legal Subsidy | 0.30% capped $3,000 | 0.40% capped at $3,000 |
| Valuation Subsidy | No Valuation Cost | No Valuation Cost |
| Min Loan | $200,000 | $1,000,000 |
| Available For | Refinancing & purchase Commercial & industrial properties Operating company only (higher rates for IHC) | Refinancing & purchase Commercial & industrial properties Operating company only (higher rates for IHC) |
The pace of Fed’s easing cycle in 2025 may be in question, but interest rate for commercial property loans are still expected to go on a downtrend especially for floating rates with 3-month SORA now trending below 3% soon.
Speak to our consultants to see if it still makes sense to switch to fixed or floating property financing rates. We showcase here two of the best packages for commercial & industrial property loans, subject to availability (banks typically stop the promotion when fixed tranche for the promotion is used up, so hurry.)
Lowest 2.40% Fixed (Min $500k)
In general, other than headline-grabbing interest rates for the initial few years of the loan, we tend to recommend packages pegged to market indices like 3-month compounded SORA with reasonable thereafter spreads (the mark-up above the loan peg) 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, at MortgageWise, our philosophy is to work long-term with all clients and we understand the frustrations of most commercial property owners. The problem with most commercial property loans is that the spreads once lock-in period ends can shoot up to obscene levels like above 6.50% especially when they are pegged to commercial BOARD lending rates. This often pose a headache for most companies or business owners who are at the mercy of banks when it comes to repricing offers, or be forced to pay back the legal fee subsidy (clawback).
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 essentially a fair market-based financing rate which will rise and fall according to economic cycles.
Speak to us now if you have a commercial property loan with interest rates expiring within the next 6 months. If you also have a residential private property loan, which most property investors do, better yet, refinance through us and find out how you can become Mortgage-Free In 6 Years at the same time, potentially on both the residential as well as your commercial property loan! (Click below)
Need more personalised advice? Not only do we help clients navigate through the myriad of Singapore mortgage rates quick and fuss-free and get you the best home loan Singapore, we show you how to become Mortgage-Free in 6 Years! So, be it for residential or commercial property loan, work with us today and you’ll also be helping to support our social cause!
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Lowest 2.40% Fixed (Min $500k)
Disclaimer: MortgageWise Pte Ltd is not in the business of providing financial advice nor are we licensed or regulated by MAS under the Financial Advisory Act (FAA) in Singapore. All information presented are opinions and any representations given, whether by way of example, illustration or otherwise, are purely portfolio allocation advice and not recommendations or inducements to buy, sell or hold any particular investment product or class of investment product. All opinions are generic in nature and are not tailored to the particular circumstances of any reader. Seek advice from a qualified financial advisor before making any investment decision.
Though every effort has been made to ensure the accuracy of the information and figures presented, we make no representations or warranties with respect to the accuracy or completeness of the contents in this blog and specifically disclaim any implied warranties or fitness for a particular purpose. We shall not be held responsible for any financial loss or any other damages suffered whatsoever, directly or indirectly, if you choose to follow any of the advice or recommendations given in this blog.
