When people think about getting a loan to purchase a property or commercial plot, often they are aware of the availability of the best home loans for their residential property. However, not many people are aware of the loan against commercial property schemes that Indian banks offer to consumers. In the case of an individual facing a dire need of real estate to dispatch his business can conveniently procure this loan to fund their business needs.
LACP, or also known as Non-Residential Property Loan, is generally provided by banks and NBFCs. However, certain crucial factors play a major role in influencing the chance of getting your loan approved. Let us have a glance at those factors and understand how you can dodge those factors easily.
Factors Affecting the Approval of Loan against Commercial Property
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Category of the Developer
If you procure the loan following an under-construction property, only then your finance will be applicable. In some cases, this funding flourishes as a privilege to the lender as they get to see whether the under-construction property will execute on time or not. To this point, the moneylender will verify all prior records of the developer. And if the developer’s track record does not resemble or seem adequate, the lender will turn down the loan application.
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Technical Evaluation
When the subject line is commercial properties, lenders generally double-check the technical specifications of the property and be stringent about whether everything matches. The specifications include features like an emergency evacuation plan, fire exits, an emergency exists, elevators, double staircases, lifts and so on. The loan provider will approve your loan application and disburse the finance only if your site or building arrangements meet their requirements and seem satisfactory to them.
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Legal Approvals
The lender, however, requires to check thoroughly and be assured of all legal approvals that you generated to sanction the loan. The lender will also review that there is no foreseeable cause, which may head to the destruction of the premises. On this point, the moneylender usually verifies and count the building clearance plan from the local municipality and the fire department.
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Property Valuation
We have seen a number of commercial property loan borrowers request a more extensive amount of finance on numerous occasions compared to its actual cost. Hence, every lender relies on an expert evaluation team to combat the issue that helps them estimate the exact worth of the property report the credit value drew on the same.
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The Newness of the Property
An under-construction or newly composed property is more inclined as a safety component than an older one to the lenders. Besides, in several cases, an older property stands the prospect of being wrecked for reconstruction purposes and/or other safety-catch concerns. That is why lenders prefer dealing with properties that are newly built, not mature ones.
Verdict:
We hope you captured a fair idea regarding a loan against commercial property and what points can affect your chance of getting the loan approved. So, you can now easily apply and borrow the finance without getting involved with the prospect of rejection. However, you have to remember it also that getting a commercial loan is a costly feat. Before you apply, check whether you have the capacity to repay the amount.
