Warehouse Loans

How to get a Warehouse Loan

When it comes to buying a warehouse getting a loan is a similar process to other types of commercial lending. In terms of commercial security on a loan, a warehouse is viewed as a standard commercial property. 

As with other commercial property loans, commercial lenders will generally require your profit (EBITDA) to be at least 1.5x the total interest costs for investment purposes and 1.25x for owner occupied (used for your own business) for warehouse loans. 

Therefore the application process to own a warehouse is not considered a complex security type and is viewed similar to a commercial property loan.

Warehouse Loan Lines of Credit

An alternative type of finance to a warehouse loan can be a line of credit with the warehouse as security. A warehouse line of credit, differs from a loan as it gives you funding up to a predetermined limit and you only pay interest on the funds drawn down. 

It is best to speak with your local Mortgage Choice broker to understand what type of commercial lending is best for you when it comes to buying a warehouse. 

Warehouse Loan Interest Rates

Similar to other commercial property loans, the interest rates vary between lenders, however when compared to normal home loans they do tend to be higher. The interest rates can be higher than residential mortgages as warehouses and commercial properties can be seen as a riskier investment to lenders. 

During the application process, offering residential property as security may be considered by lenders to help lower the interest rate on a warehouse loan. 

Buying and Owning a Commercial Warehouse

If you are looking to buy and own a commercial warehouse, whether for your own business or as an investment, there are many funding options to explore.

Your local Mortgage Choice broker can help you select a warehouse loan that is suited to your needs and budget, and can give you a clear idea of how much you can afford to borrow and the regular loan repayments.