How to take a loan for the purchase of commercial real estate - creditnice.co
Commercial real estate is buildings, land plots, and other objects used for profit and business, for example, shops, hotels, office buildings, agricultural enterprises, industrial facilities, shopping centers, warehouses, etc.
The purchase of one of the listed objects requires significant financial resources, which cannot always be withdrawn from circulation without harming current activities. Especially if we are talking about a small business that has limited opportunities.
Entrepreneurs often face a common problem - to expand the business, it is necessary to buy new objects, but there is not enough money for this. In this case, they can choose one of the ways to overcome financial difficulties:
- • take out a loan under the commercial lending program at the bank;
- • get a mortgage for commercial real estate.
Let's figure out what financial offers clients can see on the modern credit market and how to choose the best option.
Features and advantages of commercial mortgage and lending
To begin with, it should be noted that many Ukrainian banks confuse commercial mortgages with commercial lending. As a rule, this is due to the fact that the essence of commercial mortgages (loans for the purchase of real estate, in which the object of crediting acts as collateral) is the basis of commercial lending programs offered by almost all banking structures in the country. At the same time, it is important to remember that a commercial mortgage (unlike commercial lending) is not related to loans granted to finance the implementation of the project - for development purposes.
Most banks are interested in a commercial mortgage, as it minimizes risks, and the object purchased on credit will be used and bring stable income. It is also clear how payments will be made, and how to return funds to the bank in case of default. All these features make a commercial mortgage more profitable, as long as there are no problems with it, which are typical for the mortgage of residential premises, for example, during the eviction and further accommodation of citizens who live in an expropriated house or apartment.
The process of obtaining a commercial mortgage is in many ways similar to obtaining mortgage loans for the purchase of housing. Yes, the client must provide a similar package of documents, pay a large down payment, as well as go through the procedure of evaluating the object to be acquired, etc. Commercial real estate purchased by the client is primarily evaluated by the bank from the point of view of liquidity and profitability.
The most significant advantages of purchasing commercial real estate for a mortgage include:
- • quick acquisition of the necessary premises. The borrower has the right to use the real estate immediately after concluding the mortgage agreement;
- • expanding business and increasing profits by acquiring new areas;
- • obtaining additional profit. For example, after purchasing an office building, the client can rent part of the premises to other persons;
- • price increases for commercial real estate will not have any impact on the borrower.
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Some lenders can offer their clients an extension of the terms of commercial lending, the possibility of early repayment of the loan, as well as financing against the collateral of an already registered real estate object.
Particular attention should be paid to the purchase of commercial real estate in installments. This option is less popular with customers, as it often involves a large down payment and in some cases reserves the right to increase the price of the object due to an unstable economic situation.
Who can get a mortgage for the purchase of commercial real estate?
Mortgages for commercial real estate are offered to both individuals and legal entities. At the same time, the client's business must occupy a certain niche, develop stably and operate on the market for at least six months. If the entrepreneur cannot provide the necessary documents or is on the verge of bankruptcy, his application will most likely be rejected.
On average, the decision-making period for a loan, the amount of which does not exceed $100,000, is about 5-7 working days.
Which banks offer loans for the purchase of commercial real estate?
Today, Colombia has a sufficient number of mortgage lending programs for the purchase of commercial real estate. As a rule, the main target audience of commercial mortgages are individuals who plan to purchase new premises for the expansion and development of a small or medium-sized business.
We can single out five relevant programs from various Ukrainian banks that offer loans for the purchase of commercial real estate:
1. Megabank has developed the Business-Real Estate program for its clients, which has the following conditions: real rate - 20.30%, annual rate - 18.50%, one-time commission - 1.00% of the amount, no monthly commission, first installment in the amount
30.00%, security - movable and immovable property of the borrower.
2. UKRSIBBANK offers the "Real Estate for Business" program on the following terms: real rate - 20.69%, annual rate - 18.90%, one-time commission - 1% of the amount, no monthly commission, first installment in the amount of 40.00%, collateral - real estate to be purchased.
3. Ukreximbank has prepared the "Real Estate for Business" program, which has the following conditions: real rate - 21.72%, annual rate - 19.50%, one-time commission - absent, monthly commission - 0.10%, first installment in the amount of 30.00 %, collateral – real estate to be purchased and/or liquid assets.
- 4. Credit Agricole has developed the "Real Estate for Business" program for borrowers on the following terms: real rate - 21.85%, annual rate - 20.00%, one-time fee - 1.00% of the amount, monthly fee - absent, the first contribution in the amount of 25.00%, security - real estate, equipment, vehicles, material values.
5. Ukrgasbank offers the "Real Estate on Credit" program, which has the following conditions: real rate - 22.79%, annual rate - 21.00%, one-time commission - 1.00% of the amount, no monthly commission, first installment in the amount of 30.00 %, collateral - liquid real estate.
In order to attract the attention of potential borrowers, some banks cooperate with various real estate agencies. Such agencies can limit themselves to looking for clients or provide additional services during the preparation for concluding a mortgage contract.
What are the requirements for borrowers?
Most banks have certain criteria that their clients must meet. To obtain a loan for commercial real estate, the borrower must meet the following requirements:
- • If it is a commercial mortgage for legal entities, then the company must be registered in Colombia, if for individuals, the client must also provide relevant documentation.
- • Age restrictions often apply. For example, the bank is ready to approve the borrower's application if he is at least 21 years old, but not more than 65 years old.
- • The client must provide financial statements, documents confirming the level of income, as well as permission to engage in this or that activity.
- • One of the most important criteria is a positive credit history.
- • The borrower must not have any aggravating circumstances.
- • The client must have insurance.
Before issuing a loan, bank employees carefully check the borrower, his business and financial reputation - only after that the final decision on the loan is made.
Today, commercial mortgages are not as widely distributed as other credit products. This is primarily due to economic instability and crisis conditions in the country. However, the potential of this market is quite large and, according to analysts' forecasts, it will develop more over time.
