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Acquiring a loan for purchasing a commercial real estate includes a unique process and the electricity criteria unlike the familiar path taken for residential properties the distinction might leave you feeling overwhelmed and unsure even if you are well versed in the details of home loan applications. You need to know that the transactions in the world of commercial real estate can encompass different properties like office space retail outlets. It does not matter whether it is under construction or just move in the commercial property loan process is completely different and you have to follow it.
The process for securing a home loan might look simply but getting finance for office space or commercial units is completely different. If you are a potential investor navigating this complex terrain, then you need to look no further as we have your back. We will help you streamline the process of securing a loan for purchasing a commercial property and we can also help you address your specific challenges.
For residential transactions you will have to pay a processing fee that is capped at ₹10,000 but for commercial property the fee can range around 1.5% of the total loan amount. Depending on the situation you can also get a minimum charge of 0.5% for commercial loans
The loan to value ratio is the percentage of the loan amount that is sanctioned against your property value. It generally ranges from 75 to 90% for residential property but it decreases greatly, that is around 50 to 55% for commercial properties. It means that you can secure just half the value of the commercial asset as your loan amount. Ideally it means that you have to pay a huge down payment.
As we offer commercial property finance just like any other lender, we will also check the developer’s profile and reputation. It is especially true with the commercial properties still under construction. Even though commercial properties have a quick development timelines as compared to residential units they generally have a lower occupancy rate. So, we examine the builder’s delivery schedule before we approve your loan amount.
You can get a commercial estate loan no matter whether you are a salaried individual or a self- employed professional like a doctor engineer architect lawyer or a chartered accountant. You can also apply for commercial real estate financing if you fall under the category of entrepreneur trader or contractor.
If you meet all this criteria the likelihood of your loan approval at a competitive interest rate increases.
It is very important for you to determine the viability of purchasing a commercial property through a loan, include understanding scenarios across various stages of your professional and financial journey.
If you have received a major lump sum or savings, you can consider investing in commercial agricultural or industrial Land. When you generate income through monthly rentals you can swiftly recover their investment and capitalize on capital appreciation in such a case it is advisable for you to avoid a loan unless your monthly income covers EMI for 50% of the property value after accounting for maintenance and other expenses.
When you are at the peak of your career with considerable earnings and savings availing a loan for a promising commercial asset can be a great thing to consider. You need to ensure that your salary increases can cover the loan amount and aim to repay it within 10 to 15 years remaining in your professional career. You should ensure that it does not impact your savings, investment and other fundamental financial objectives.
Instead of opting for a loan you need to focus on smart investments to accumulate savings for your future commercial property purchase. You need to start with a small but lesser investment in a commercial asset, gradually building savings and earning from it. This approach allows for growth without the stress of the loan. Eventually you can use the accumulated savings to invest in larger income earning assets or offset of future loan with the increased income.
If you are looking forward to selling your ancestral property, then you can consider investing the process directly in the commercial property without disrupting the monthly cash flow. You can explore the tax benefits and consider agricultural or farmland for potential tax advantage. Pre released properties or office spaces can also provide you study monthly income while retail shops or showrooms offer regular earnings by leasing to some sellers or brands
We recommend you apply for a commercial property loan if you can cover a significant down payment and manage your EMI comfortably. We have a team of experts, and we can help you choose the right commercial loan as per your preferences and budget.
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