Loan to purchase a factory
Looking to purchase a factory? You will need to consider several factors to help make your decision.
Am I eligible?
- You will need a clean credit history.
- Lenders will requests a strong business plan (where you are purchasing the factory for business purposes).
- Demonstrate adequate equity. Where you are purchasing a freehold property, you can borrow up to 80% LVR of the value of the property or you can offer residential security and borrow up to 100% of the value of the purchase price
You could borrow up to 100% LVR if you give a residential property as security for the property provided you had enough equity in the property before commencement of this new purchase.
How do lenders value factories?
- Lenders will consider the attractiveness of your factory, in the event that you can no longer sustain your loan and they need to sell it.
- Lenders will factor in how many square meters there are in the valuation, and give a rate per square meter value based on similar sales in the area.
- They will look at the location of the factory and its proximity to infrastructure, such as airports, highways, train stations etc.
- Whether the factory is fitted with any specialty equipment or whether they will be process or manufacturing materials like medicine or food or electronics.
- The type of factory and its location can also have an impact on the LVR that a bank will offer you.
How does the bank assess my loan?
- Banks will want to see that you have between 1.1 to 1.4 times the income to expenses.
- Banks will want to see what your asset position is positive.
- Where you are looking to operate a business from the factory and not just buy the factory, you will need to show affordability (BAS and tax portals for the last 6 months) along with a business plan detailing your business model and forecasts.
What securities are eligible can I offer for a factory loan?
- First mortgage over a security
- General Security Agreement (GSA) over the rights of the owners and investors
- Guarantee provided by Directors
Speak to one of our experts today about how we can help you get a factory loan!