All You Need to Know About Taking a Loan Against Commercial Property

by Hero Fincorp Loans and Small Business Financing

If you own an idle property, you can make the most of it by hypothecating the same with a reliable lender. Banks and financial institutions offer loan against commercial property for business as well as personal purpose. Whatever the purpose of the loan, you can make an application and use to funds to fulfill the same. The loan is a secured loan which requires hypothecation of a property and the loan amount is based on the value of the property. The process of application is simple and straightforward which means you can enjoy a quick approval of the loan if your documents are in place.

Individuals, business owners and corporations can apply for the loan. A high credit score means a quick approval of the loan. You will be required to provide documents which include an identity proof, income proof, address proof and the income statement as well as pro forma balance sheet of your business. The loan amount depends on the value of the asset you hypothecate. Once you submit the documents of the property, the lender will appoint a valuer to determine the market value of the property. The market value will decide the loan amount for you. Higher the market value of the property, higher the loan amount. Usually 60% of the property value is approved as a loan amount. You can enjoy a higher loan amount if the value of the property is high.

You will be required to provide complete documents of the property and incase of joint owners, you will have be joint applicants for the Loan against commercial property is a secured loan which is why there is a low interest rate applicable on the same. You can compare the interest rates offered by different lenders before you make a decision. Choose the one with the lowest interest rate as it will save you thousands of rupees. The loan has a long tenure and you will be required to make the repayment in equal monthly installments. It is important to pay the installments on time so as to maintain a strong credit history. If you default in the repayment, the lender might gain possession of the property and you will end up losing your commercial property. Consider your financial status before applying for the loan since you will have to decide whether you will be able to make the repayment on time or not. It is advisable to understand the terms and conditions of the loan before you sign on the dotted line. Loan against commercial property is preferred by business owners for the high approval amount and the flexible tenure. The loan can help you achieve personal as well as business goals without any worry. The application is usually approved within 10 working days if everything is in place. Determine the purpose of borrowing before you make an application so that you are aware about the amount you seek and the terms of repayment offered to you.