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Have You Considered These Before Taking A Commercial Property Loan?

Consider These Factors Before Taking A Commercial Property Loan

Sometimes, there are situations when you do not have enough funds to support yourself financially. In such a phase, a commercial loan may be of good use. You are most likely to find the financial institutions readily giving you a loan for your commercial property. However, before availing of such a loan, there are certain factors for you to consider.

Commercial Loan- What Is It?

In the market, you can get loans for both residential and commercial properties. The commercial loan refers to the type of loan against commercial properties. You must not get confused here because you cannot avail of this type of loan against residential property.

Many reputed finance companies can give you this loan at a cheap rate of interest. They can also offer lower charges compared to the market price. However, it would help if you did complete research about the company before making a final decision.

Do You Need To Have Any Security For This Loan?

The type of security essential for the commercial property loan is highly dependent on the bank or the lenders. Generally, they will ask for regular commercial properties such as factories, offices, shops, retail space, warehouses, etc.

However, the unique commercial properties leave the lenders at a higher risk as selling them in the market is quite challenging. Such unique properties may include car yards, old age care centres, reception centres, child care centres, land subdivisions, pubs, petrol stations, etc.

Factors to Be Considered

Before you apply for this type of loan, you must consider the factors related to a commercial loan.

The rate of Interest

It is evident that when you apply for a loan, checking the interest rate is very important. You can never afford to miss out on that. Since these are secured loans, the interest rate for loans against commercial property is not as high as that of personal loans. But different money lenders may charge additional interest rates.

You would not want to find yourself suppressed financially only because you have paid more than half of your income for the EMI of the loan for the commercial property. Thus, you have to check the interest rates charged before closing the deal with any loan provider.

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Foreclosure Norms

It is best to arrange the loan amount and repay it to the lending company before completing the tenure. You must do that because it will save you from paying the interest for the outstanding months. However, the banks never encourage their customers to repay the loan before the tenure. This is also known as foreclosure norms.

Sometimes, you will be charged with a penalty for closing the loan before the said time. You need to check this while applying for a loan against property. However, it is sensible to pay the penalty because you will be able to close the loan early.

Amount of loan

The loan amount varies mainly on the property value. The lenders evaluate the land first before proceeding further. Different lenders will assess different values for a commercial property. Generally, the amount of loan may vary from 50 to 70% of the property value.

If you need a hefty amount, you can choose the lender who offers you the highest value to your property during its evaluation.

No Tax Deduction

The property loan does not give you any tax benefit. Hence, you may want to make sure if you're going to take this loan. Please analyse the reason for taking this loan better.

Ask yourself, why do you need this money? If you are looking for loans that come with a tax benefit, low interest rate, and other lower charges, then the commercial loan may not be the right option.

A loan for the purchase of commercial property is mainly used for business or various other investment purposes. Commercial borrowers do not get the same facilities or privileges as home loan applicants. But certainly, it has its own benefits which you cannot ignore.

If you are looking for the best advice on a commercial loan, you must consider Hero Housing Finance online. They can offer you the most effective and hassle-free ways to get your loan quickly.


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