What is a commercial loan and how does one go about getting it? That’s a question most people ask when they wish to purchase a house on a loan. Buying a home of your own is a serious financial transaction and there are various ways of obtaining a commercial loan from a bank or lending institution. By keeping yourself informed of the different mortgage plans made available through various institution, you can get the loan that best suits your requirements.
Approaching a Lender
Before you approach a bank or a financial lender, its best to know what you are going to purchase so that you are then able to discuss with your lender the ins and outs of the property, how much it’s worth, the amount you need to borrow, the repayment plan etc. Once you get to know what the lender requires from you it will make things easier for you to obtain your commercial loan. Lenders most of the time wishes to find out what they can get out of it as well. The higher the income potential from the property to be bought the more flexible the lender will become because the lender will always focus on the ability of the borrower to repay the loan. If the borrower can show proof of his cash flow, his earning capacity, his income from business and any other investments he has as well as collateral, the easier it will be for the borrower to have his commercial loan approved.
Proving the Borrower’s ability to pay back
When everything is going the borrower’s way, it is possible to negotiate on the interest rates and the time period on which it should be paid to suit him. Once the lender realizes the income potential of his client, he relaxes enough to give a better deal knowing very well that he will not have any problem getting his money back. Never forget the importance of collateral which will be the property you hope to purchase with the commercial loan. Always keep in mind that if you were to default on the loan payments, the lender has all the right to repossess your property and put it on sale or auction it in order to recover his money or as it happens in most cases get even a better value for it while you lose out completely.
Negotiating for the best possible deal
Remember, the more collateral that you tie up on the transaction the greater the confidence the lender will build up and help to clear away any doubts he might have about lending you the commercial loan for the property you wish to purchase. Never ever show your desperation to the lender. Be aggressive when negotiating for the loan. Try not to accept the first offer he makes, but let him know that if he’s not willing to lend you that there are many others whom you can look to. The lender of course will try to work out things to his advantage and it’s up to you, as the borrower to negotiate and get the best deal possible.
Your main aim should be to convince the lender how advantageous the transaction would be from his point of view. Make it look attractive to him as much as possible by throwing in your assets as collateral so that he will come round to your way of thinking and be ready to approve the full amount you need.