How would you choose the best Commercial Property Loans?

There are different types of loans available today and you can apply for a loan for your specific need. For example, you can apply for a home loan for buying a new property and you need to apply for commercial property loans for buying property for your business. A commercial property loan is a credit loan offered by banks or lenders against your commercial, rural or residential property. It is a kind of mortgage loan where the property is taken as a security of the loan.

Purposes for what one can get a Commercial Property Loan:

You can get a commercial loan for many purposes such as, repairing your office, hiring new employees for your office, buying commercial equipment, etc. Also, if you are going to purchase a new commercial property you can apply for a commercial loan. New commercial property includes a new office or a new industrial or retail space.

Eligibility criteria to apply for Commercial Property Loans:

• The first thing banks will check is the type of your business, business location, your business growth, and your experience to check your reliability. They will check your financial backup also and the assets and liabilities you have. The documents they need are as per your business type like individual business, partnership business, trusts, etc.
• You need to pay a hefty processing fee for commercial property loans. Some lenders can charge you more than 1% of the total amount and few banks can charge you 0.5% only. It will be an extra burden because the processing fees will be deducted from your disbursed amount. You need to check such fees and other hidden charges before you apply.
• LTV or Loan to Value is the amount that will be decided by the bank and they will disburse the property loan based on the value of your property. They can disburse 70-75% of your total property value and you need to pay the rest amount as a down payment.
• In commercial property loans, banks will check the developer’s profile to sanction your loan because commercial properties have fewer number occupants and the developer must complete the property within a stipulated timeframe. Lenders will check the delivery schedule before they disburse your loan.

• The interest you need in commercial property loans is higher than in residential property loans. You need to pay 4 to 5% interest for commercial property loans. But, the interest rate will be decided based on your credit history.
• You have to choose a commercial property that complies with all regulations. Lenders will check such things before they disburse your loan. For example, you must choose a commercial property that complies with fire safety regulations and building codes. Apart from that, your property should maintain the regulations implemented by the government and local council in respect of environmental concerns. An emergency exist should be there on your property. If such facilities are not available on your property then you cannot avail such loans.
• Deciding the tenure of the loan is also an important factor when you apply for a commercial property loan. You will get the maximum tenure for your loan, up to 30 years. But, if you want to reduce your interest rate and settle your loan faster then you can choose a loan with a 10-15 years duration. Once you settle your loan, you will get the papers of your property from the lender and you do not need to continue with your EMIs further.
• Sometimes banks can disburse the loan amount in parts. For example, if you apply for commercial property loans for a property that is still under construction then the bank can disburse your amount in parts and the bank will evaluate the project development stage by stage to disburse your loan.

If you have a poor credit score then you can apply for a loan against property. You can mortgage your property to get a commercial property loan. It will reduce your rate of interest and you can easily get such secured commercial property loans. You can also have the chance of built your credit score by repaying the loan at the right time.