How To Avail Fund For Buying A Commercial Property

There are many benefits to having your own commercial space. In the long run, you save substantial rent costs, and the profits are practically limitless. However, getting your commercial property in the first place is the greatest challenge. With soaring real estate costs and limited liquefiable resources, it becomes challenging to buy a property with your existing funds.

Financing a commercial property has many variants, and this makes it complicated and difficult to understand. The problem most first-timers face while looking for loans is finding out which lenders and their services suit your business needs the best. Out of the several loans you can avail to fund a commercial property for your business, a loan against property is probably the best in the market today. Let us tell you why.

Lower interest rate

Property loans are often given after taking some existing property as collateral. For this reason, the loan against property interest rate is lower than that of personal loans. The rates of interest generally range between 10% and 13%. In comparison, personal loan charges are higher.

Easy to get

As property loans are secured loans, banks are more willing to provide these loans after the background checks and verifications are complete. Before starting a commercial venture, vendors anyway have all their documents prepared and in order. These are mostly the same documents required during loan verification. If you have this worked out, you will find it very easy to get a property loan.

Longer tenure

Commercial property loans are available for more extended tenure periods, going up to 15 or even 20 years. In the case of personal loans, the tenure extends to a maximum of 7 years.

Lower EMI

An inverse relationship exists between a loan tenure and the EMI. The longer the tenure, the lower the EMI will be and vice versa. Commercial property loans are availed for a longer tenure. Therefore they are offered at lower EMI amounts and don’t significantly affect your working costs and income. However, it is always advised that a person should take loans for the shortest tenure available, as the interest burden will be lower as compared to a longer tenure.

What kind of property can you offer as security?

You can mortgage a self-occupied as well as a rented residential property. It can also be a piece of land that you own. However, what you need to ensure is that the property is free from any kind of mortgage, litigation or any legal or personal ownership issues. The title of the property you are offering against the loan as security should be yours.

How is the loan amount decided?

Many factors are taken into consideration while a lender decides on the loan amount to give you. This includes factors like income, age, spouse’s income, the value of the collateral offered, etc. Generally, lenders provide you with a loan amount of up to 60% of the value of the property you want to buy.

Keeping these criteria in mind, you can decide on a budget and your spending capacity beforehand and adjust your payment plans accordingly.

With all this information, now would be an excellent time to get started on your property financing options.