Things to Qualify for A Commercial Property Loan Using Your Existing Property

A commercial real-estate loan is a high-value financing option that allows prospective borrowers to avail of necessary financial assistance by mortgaging their existing commercial properties. Such properties may be used for any business or revenue-generating purpose. In case individuals are seeking an adequate and affordable financing option, they can opt for a commercial property loan for expanding business, purchasing advanced machinery, renovating offices etc.

However, to avail of such a credit facility, prospective borrowers need to know about the prevailing commercial property interest rates and apply accordingly to ensure affordable borrowing.

How to Qualify for A Commercial Property Loan?

In this financing option, a commercial property loan denotes credit against commercial property, wherein prospective borrowers or investors can obtain funds by mortgaging a commercial real estate property they own. However, lending institutions have become more cautious while sanctioning loans to purchase commercial property.

Therefore, if borrowers are contemplating a loan against property, they can acquire it by mortgaging both commercial and residential properties. But, above all, check the funding criteria and other requirements to ensure a hassle-free loan application.

  • Know the market value of the mortgaged property

An LTV or loan-to-value ratio denotes the percentage of the loan amount sanctioned against the overall market value of the mortgaged property. Usually, financial lenders sanction 65%-80% of the loan amount against the valuation of the mortgaged property. This is why it is ideal for mortgaging a high-value asset that will ensure the highest value in the market. Resultantly, borrowers can ensure prompt approval of a sizeable loan amount at affordable commercial property interest rates and flexible terms.

  • Make a substantial down payment

When availing of a loan against property by mortgaging a commercial property, borrowers should always try to make a considerable down payment. By doing this, they will have to borrow a relatively lower loan amount. Resultantly, it will ensure prompt loan approval, thereby reducing the risk of the lenders.

Moreover, by borrowing a lower loan amount, borrowers can get a competitive interest rate and plausible loan terms against it. Furthermore, they must also learn about the factors that affect the interest rates for loan against property and apply accordingly to improve the borrowing experience.

  • Meet eligibility criteria

Before knowing the step-by-step guide to apply for a loan against property, intending borrowers must meet the qualifying parameters of such financing option. Like every other credit option, a loan against commercial property also comes with certain eligibility parameters, and they are – 

  • Applicants ages should be between 23-62 years (salaried) and 25-70 years (self-employed)
  • Both the applicants should be residents of India
  • Maintain a CIBIL score of at least 750
  • Salaried individuals must have a work experience of a minimum of 3 years in a reputed organisation. On the other hand, self-employed must have a stable income source.

By meeting the aforementioned qualifying parameters, borrowers can negotiate with the lender for favourable commercial property interest rates against the borrowed amount.

  • Submit necessary documents

Sometimes such financing options can be chosen to purchase a commercial shop or commercial real estate property. Besides, by submitting the following documents, borrowers can secure reasonable commercial property interest rates:

  • KYC documents
  • Address proof
  • Financial statement for last 3 months
  • IT returns
  • Latest salary slips
  • Mortgaged property documents

Note that borrowers may need to submit additional documents if required.

Furthermore, borrowers can also secure competitive commercial shop loan interest rates when availing of a loan for purchasing a shop. Therefore, to ensure prompt loan approval and a hassle-free loaning process, borrowers can approach leading financiers. Moreover, such reputed lending institutions also provide pre-approved offers on a wide array of secured and financial products.

Such personalized pre-approved offers will ensure a faster loan application process and save substantial time. Therefore, existing borrowers can check their pre-approved offers by mentioning their names and contact details.

Having said so, borrowers can secure reasonable commercial loan interest rates against their borrowed amount by following the aforementioned aspects. However, potential borrowers must research the lenders and their lending terms before making an informed decision.

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