Commercial Bills
Commercial bills are generally associated with business lending or high-end investment lending. They provide an injection of cash for borrowers who need more than $100,000. These types of loans are generally rolled over until the borrower has the funds to repay the loan amount in full.
How do Commercial Bills work?
A commercial bill assists you to raise the finance you need for investment purposes through negotiable bank bills. The interest rate, or ‘floor’ rate, is based on two things, the Bank Bill Swap Rate (BBSW), and a margin added by the lender of 1.00-3.00% called the facility fee. This margin can vary significantly between lenders, depending on a combination of factors including the financial strength of the borrower, the underlying security, competitive pressures etc.
The bills can be either variable rate or fixed rate, with periods varying between 1 and 10 years. During the loan term there are ‘rollover’ periods, at which time the interest rate and the amount borrowed may be recalculated. The rollover period may be 30, 60, 90, 180 days, 6 monthly or even annually. Interest is paid at each rollover, and you may negotiate any number of combinations to suit you.
| whats next? | ||
| home loans for your situation | how much can I borrow? | savings and loan calculators |
| residential investment loans | using a mortgage broker | talk to a broker |
Ceiling Rates
Similar to capped rates, a ceiling rate is a feature applied to a variable rate commercial bill that ‘puts a ceiling on’, or limits, how high the rate can go. This can be particularly useful in a volatile interest climate, but be aware that lenders will generally offset the potential costs of a ceiling rate with a higher starting, or ‘floor’ rate.
Interest Rates and Terms
With fixed rate bills, your interest rate is constant for the term of the facility, which may include several 'rollovers'. With variable rate bills, the interest rate is fixed for each rollover period, and may change as the period is extended or rolled over, the interest rate may rise or fall.
For more information on commercial bills
If you would like more information on Commercial Bills, or borrowing for either residential or commercial investment, c simply click here to talk to a mortgage broker about your options. Or call us on 13 LOAN or direct on +61 2 9249 3739.
