Buying a property for commercial use requires huge funding. Even if one has enough sources to finance the project, one would like to save the money for further investments in the property and instead take a loan. Commercial real estate loan is especially meant for issuing a loan for buying a property for its commercial use.
Which property is mostly preferred by the lenders? Usually a property having the capacity to generate substantial income or the property having prospects of earning good income is preferred over any other property for offering commercial real estate loan. So before applying make sure the property you intend to buy has potential for assuring profits. Such a property makes commercial real estate loan taking a lot easier.
Commercial real estate loan requires a collateral as huge finance is at stake for the lender. Usually the property to be bought is placed as collateral. The deal papers of the commercial papers are taken in possession by the lender only to be returned when the loan is completely paid off. This means the borrower should always be cautious in timely repayment of loan installments as otherwise lender will repossess the property for recovering the loaned amount.
Lenders provide commercial real estate loan anywhere in the range of £100000 to £300000. Greater amount also can be availed depending on the type of the property and repayment capacity of the borrower. Because the loan is fully secured by the commercial property, lenders offer lower interest rate which can be further reduced on comparing different lenders.
There is a larger repayment term ranging from 10 to 30 years for commercial real estate loan. This larger duration enables in spreading the loan installments and monthly installments get reduced for the convenience of the borrower.
Make sure that you have taken into account the feasibility of the commercial property you intend to buy. You should keep your documents ready in case the lender asks for them. Also remember that the commercial property may take time to generate income. So by that time you must have enough money to pay off the loan installments as the loan would be used in buying the property. You may have to make a down payment of 20 percent of the commercial property value. Lender may ask you to give tax records of the commercial property for assuring that investment in the property is safe for the lender and for borrower as well. Bad credit is no impediment in offering commercial real estate loan as the loan is fully secured.
You should search for the suitable commercial real estate lender extensible on internet before settling for a loan deal. Look for the interest rate and apply to the lender offering lower rate. Online lenders process and approve the loan faster so prefer applying to them.
Tim Kelly is an expert in finance having completed her LLM in Finance from Institute for Law and Finance at Frankfurt University. To find Commercial real estate loan, Commercial small real estate loan, Commercial construction real estate loan visit http://www.commercialrealestateloan.co.uk