If you are dealing with a significant financial crisis and require a higher amount of funds, tell us anything better than the loan against commercial property? It not only fulfils your financial needs but the loan against property interest rate is also much lower than any other loan form. In this piece, we have compiled a list of tried-and-tested methods to help you with your application.
Prepare and Start Early
A loan against commercial property requires significant financial planning. Time is the most important aspect in determining whether or not you are competent for this loan. Since such a loan entails a hefty amount, lending institutions avoid taking a chance on a profile with high credit risk. Therefore, in order to get an affordable loan against property interest rate or to get speedy loan approval, make sure you pay off all or most of your existing debts and improve your creditworthiness. Don’t forget to analyze your debt-to-income ratio before initiating your loan application; if it is greater than 50%, it is best to wait for some time to get a better deal. Keep in mind that the lower your debt-to-income ratio, the higher your chances of getting a large amount loan.
Know Your Credit Score
When it comes to approving a loan against commercial property, credit score and credit history are critical. Credit score and history are terms that describe a borrower’s ability to repay a loan. Having a bad credit history indicates that lending to that profile has significant credit risk. The lending institution informs the credit bureau when you default on your loan, skip an EMI, or prepay or repay the loan on time. Accordingly, the credit bureau determines your credit score. The following are some of the most typical factors that credit bureaus analyse when determining your creditworthiness.
- Payment history
- Amount borrowed
- Loan repayment tenure
- Number of existing debts
Get Your Credit Score Fixed
If your credit score is not in good shape, then before submitting your loan against a commercial property application, try and fix the same to some extent. If there are windfall gains, utilise the same towards paying down a portion of your debt. In case you have paid all of your dues on time or have paid off all of your previous debts, but your credit score still shows low numbers, take action right away. Request your lending institution to resend the loan closure report to the credit bureau so that your credit score can be updated. In addition to the preceding things, you may also do the following things.
- Don’t close your old account
- Attempt to avoid opening a new account.
- Multiple applications should be avoided.
- Sending repeated loan enquiries at regular intervals is not a good idea.
Find Out the Amount that You Can Borrow
If you want to apply for a loan against commercial property, you should make some calculations based on the lender’s qualifying conditions to determine the maximum loan amount you can get. Knowing what you can obtain and how much you can afford will help you secure a loan faster. To gain a better understanding of this element, contact your selected lending institution branch. It is also a good idea to utilise an EMI calculator for a loan against commercial property to figure out your monthly payment in advance. It will assist you in determining the exact amount that you will be paying for the principal and interest component on a monthly basis.
Review Your Lender’s Eligibility Criteria
One of the most common mistakes people make is applying for a loan against commercial property without first learning about the lender’s qualifying conditions. If you do so, not only will your application be rejected, but you may also be sanctioned a loan with a higher loan against the property interest rate. Refer to the following pointers to check whether you qualify for this loan or not.
- Citizenship: You must hold an Indian nationality.
- Age: You must age between 25 and 75 years to apply for this loan.
- Employment Status: A loan against commercial property is available to self-employed or business owners only.
- Business Experience: To acquire this loan, you must hold three years of experience in your current business.
Keep in mind that the minimum income requirement, as well as the other elements listed above, may vary from one lending institution to the next. In addition, you should review the list of required documents to ensure that your loan application goes as smoothly as possible.
Be Ready to Explain Your Needs
Since the fund value is significantly higher in the loan against commercial property, financial institutions want you to disclose the reason for which you are seeking this loan. However, asking for the purpose does not mean that there is a restriction on the fund usage. You are free to use it for the purpose you deem fit.
Bottom Line
Since a loan against commercial property reduces the risk of default by involving a high-value asset, the lender is less likely to reject your application if you follow the above guidelines.
