Applying and getting a loan for a commercial property is altogether a different ball game than availing a loan for a residential property. Many of the banks and even NBFCs do not lend for commercial properties. One reason is that many people who buy commercial properties are investors. If you buying a commercial property, lets say a shop or showroom, for your own use and are looking for loan, then you are more likely to find a lender. Here are some of the things you must keep in mind before you apply for a loan for commercial property:
1 Technical Assessment: If you are buying a shop or a showroom in a commercial building, make sure that the technical aspects of the building are in place like emergency exit, fire fighting arrangements, shafts of proper length and width, lifts, etc. Take the relevant documents from the developer of the building before you apply for loan with a bank or NBFC because the lender will check these documents before deciding on lending to you.
2 Statutory Approvals: The commercial building must have all the clearances from various government departments like forest department, fire department, etc. Even the plan of the building has to be approved by the local authority like the municipality. A photocopy of these documents must be taken from the builder or the developer by you for your loan to be approved. Without these documents, no lender will be able to sanction loan to you.
3 Valuation: The lenders are getting more and more strict about lending for commercial property and if there is any inflation in the property value by the builder in order to help you to get higher loan amount, it is most likely to be rejected by the lender since they have experts who carry out valuation.
4 Minimum Area: Most lenders who lend for commercial properties have their own guidelines as to how much minimum area they will finance in a particular locality or region. Many retail real estate projects have very small spaces also for things like ATMs or other kiosks. If you are taking loan for such a space, the minimum area qualification of the lenders may not be met and your application will be rejected.
5 Difference in Value of Properties In The Same Building: It is important for you to know that there is difference in value of property within the same commercial building on per square feet basis. The retail spaces are more expensive than office spaces in the same building. If the price of office space in a building is X per square feet, the price of retail space can easily be 1.5 X per square feet. The trend of commercial buildings having both retail and office spaces is catching on. If you planning to buy office space, don’t assume that it is will be as expensive as retail.The loan amount will depend on actual valuation by the lender.
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