A Guide on Commercial Property Development Finance

1. 0105959000 A Guide on Commercial Property Development Finance It is necessary to understand that commercial property finance is not the same as obtaining loan for purchasing residential property. It is easy to obtain home loan approval. But getting commercial property loans for purchasing your own workspace/office is something that only a handful is aware of. These loans are meant to be invested in business use only like purchasing office complexes, office space, restaurants, hotels, etc. https://www.tuhf.co.za

2. 0105959000 Commercial Property Type • Before applying for such commercial property development financewith any bank or lending institution, you need to first know what commercial property constitutes of.  It is rather classified into two segments, namely: • Retail outlet • Office space • Both are further subdivided into: • Ready-to-use/occupy • Under construction • Being commercial properties, they are likely to be expensive and overpriced. https://www.tuhf.co.za

3. 0105959000 It is generally businessmen and those eager to avail workspace/office for use that may be interested to purchase them. There are also investors who may be interested to rent out their commercial properties to interested companies/firms. Lenders prefer to offer such loans to those eager to establish their own offices. But they can be a bit anxious when giving loans to investors. What factors affect commercial property loan approval? • When applying for commercial property finance, you need to consider certain aspects. It includes preparing documents such as tax returns, address proof, ID proof, income, statement, etc.  https://www.tuhf.co.za

4. 0105959000 • You are to bear processing fees as specified by your lender. Lenders generally charge one percent of the total amount as processing fees. But you may reduce this fee by availing different offers. ‘Interest rate’ is another vital aspect to consider. Interest rate charged for commercial property finance generally is much higher unlike other commonly provided property loans. Several other charges are included such as survey fees, loan application charges, annual fees, overall loan cost, etc.  • The lenders also focus on the builder’s market goodwill and personal profile. For any under construction property, the lenders are likely to pay more attention towards the builder’s details. This is deemed essential to enable the property to get ready at the time of possession. Obtaining loan for new commercial property is much easier when compared to seeking loans to buy old properties. The chances of getting loan reduce significantly if high risk is involved. https://www.tuhf.co.za

5. 0105959000 • Commercial property finance tenure is also quite short when compared to those offered on residential or housing loan. Maximum loan repayment tenure on commercial property is approximately 10 years. Moreover, it does not come with high loan margin. The lender company also gives out certain specifications for the borrowers to adhere to.  • The borrower is eligible to obtain a loan if only he/she has minimum sq.ft. area to get financed. Moreover, different lenders and companies are found to adhere to different policies, regulations and rules. . https://www.tuhf.co.za

6. 0105959000 • Loan-to-Value ratio (LTV Ratio) is another factor considered to obtain commercial property loan. The ratio is used to calculate loan value provided against property value. Borrowers having lower amount loans when compared to value ratios can qualify to obtain loan. Since there is more stake present in the property against less risks involved. LTV range of about 65-80 percent is allowed in case of commercial property loan. • Hence, discussing with the lenders on your requirements as well as meeting their set conditions can ensure obtaining commercial property loan at low interests. https://www.tuhf.co.za