What to consider before applying for a Commercial Property Loan
Often when a commercial property loan is taken, borrowers use the money acquired from rents to repay the loan. However, what borrowers should understand at this point that there is a difference between what is required when you apply for a residential property loan and what is required when you apply for a commercial property loan. The latter has more stringent and non-negotiable requirements because the cost and risks are high.
New City Financial helps borrowers understand the type of loan they should take and advise them what not to opt for depending on their financial standing. This article will help you understand the important point you should consider when you opt for a commercial property loan.
The basic requirements for a commercial property loan are more demanding and it depends on multiple factors like the location of the asset, the size of the asset as well as how accessible the property is apart from the condition of the property itself. Appraisals are made by the lenders on all these factors and more. Since the loan amount is big, a borrower should have a good and sound credit history. This would help the lenders get an idea of whether the borrower be able to pay it off on the terms documented or not. They would also want a proof of your income as well as assets on your name in case payment default happens.
Huge Down Payment
It is often seen that lenders require a larger amount as down payment because there are high risks involved. Usually they offer 55-70% as loan and the rest of the amount is required to be paid by the borrower as down payment.
The above two are the most important factors that help the lenders decide whether to approve or disapprove your loan application. Some other factors include a sound income stream of the borrower, a good profile of the professionals working with you, documentation of the building plan under review or any blueprint that you might have, and any other documentation that will demonstrate that you are financially strong and will be able to pay the loan off.