Richard Butler Creagh on Commercial Property Loan
If you are a self-employed whether it be a Lawyer, Doctor or Businessman you need a proper workplace where you can work with a peace of mind and an environment which gives you inner motivation towards your work. To purchase such a commercial property it is a bit difficult as the price of such property is comparatively higher than a residential property and people generally opt for business loans to fulfill this need. However, to overcome such a problem - a commercial property loan will help you own a workplace of your choice so that you can take a step closer to your business goals.
What is a Commercial Property Loan? It is basically financing a fixed property used exclusively by a borrower to purchase a property for the commercial use. A borrower can take the loan and then provide it for rent as well. This includes property for office and general commercial accommodation.
Commercial Property Loan can be availed for the following purposes:
- Construction of an office, marts or shops
- SMEs for building their business infrastructure the premises for work
- The purchase of property for operating business
- Developers of properties for rent to SMEs
- The Commercial Lending Process
- The purchase of a new office
- The purchase of a shop and clinic
- The extension, improvement of an office or clinic
Key criteria considered by the lenders for lending a commercial property loan are-
The type of commercial property for which loan is to be availed – it includes checking about whether it’s a factory, office, warehouse or shop-front and its location, together with a value report. Applicant’s capacity to repay – This includes all of your income. Applicant’s deposit and any available equity
What Should You Know in Advance?
Specialized Commercial Lenders. Commercial loans may be less familiar with most of the people, but there are many loan options available from a range of specialized lenders for a commercial property loan. Interest Rate. Commercial property is often granted at higher interest rates and more restrictive conditions than residential property loan.
Lower Loan to Value Ratios on Commercial Loan = Larger Deposits. Where in a residential property you can borrow up to 90% of the value of the property (LVR). But in a Commercial property loan, you can borrow normally only 70%. This means you need generally a larger deposit or the other possible thing is be able to access more equity.
Shorter Loan Terms. A typical home loan tenure is generally 30 years, whereas for a commercial property it is generally between 15 to 20 years only. As a consequence of this- the borrowers need to show a lender a greater capacity to repay, as the repayments will be higher as the principal will need to be paid down in a much shorter time period. All this leads to a high EMI.
Check back for more property loan tips,
Richard Butler Creagh has been in the bridging lending business for many years. He became involved with this sector through his experiences in buying and selling his own properties. He soon realized that the most important part of this process was to be able to have the availability of good financing. Learn more about Richard Butler Creagh the founder of Henley Finance. Read more about Henley Finance which is a bridging lender company that invests in UK property here. Connect with Richard Butler Creagh through his Linkedin page here.
Richard Butler Creagh has been in the bridging lending business for many years. He became involved with this sector through his experiences in buying and selling his own properties. He soon realized that the most important part of this process was to be able to have the availability of good financing. Learn more about Richard Butler Creagh the founder of Henley Finance. Read more about Henley Finance which is a bridging lender company that invests in UK property here. Connect with Richard Butler Creagh through his Linkedin page here.
You can also watch Richard Butler Creagh Youtube video here:
