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How to get a loan while purchasing commercial property?

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Most of the entrepreneurs have often found themselves in the situation of understanding whether they would get the commercial property loan or not. Most of the borrower’s come with the query to the lenders even if they have not taken significant loans. Anyone who is trying to get a loan for residential property can easily get it, but getting a commercial property loan is equally difficult.

If you are trying to get a loan for commercial property, you should be a little careful. Commercial properties are usually available in two different types: Office Type and Retail Outlet. These are further divided into two types: Immediate Occupying and Under-Construction. You may choose to get the loan accordingly.

All the lenders are very doubtful about giving out loans for commercial property. This becomes extremely difficult in case of the under-construction properties. This is usually because most of the commercial properties are investors and thus, getting a loan for it extremely difficult.

If you have been running a business of your own or are a startup, you can consider reaching out to lenders. This will make it easier for you to get commercial property loans. Most of the lenders do not give out funds for commercial properties. Even if they do, they provide for the ready ones and not the under-construction ones. As a result, you can consider consulting the experts at Forum Properties to understand the funding options.

How is residential property funding different from commercial funding?

There is a significant difference in the loan amount, documents required, and more for funding the residential and commercial properties. Some of the prominent options include the following

High Fee: The processing fee amount is usually set for residential properties and may even be ‘Nil.’ In the case of commercial properties, the funding may be equivalent to that of a certain percentage of the overall loan amount. If your property is attractive and liked by the lender, the amount may further be reduced as well.

Loan Term: The loan term in case of residential properties is very much different from that of commercial properties. In case of residential properties, the loan term can be extended up to 30 years; however, for commercial properties, the loan term may be applicable only up to ten years.

Minimum area: The fund may be provided on the per square foot area. If you are a retail outlet, the lender may check the available space and then proceed accordingly. If space is lesser than 250 sq ft, the lender may not offer funds for your commercial property.

Investing in commercial properties will require you to have higher investments. Moreover, it will also require higher monthly cash flow. Nonetheless, at the same time, it can bear you greater returns.

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