First, a loan for the purchase of business premises can be taken out on both an individual and a company. In practice, this means that you do not need to run a business to finance this type of property. Additionally, in the case of a company loan, you can also take it for new business from the first day of its operation.
If we are considering buying a property for an individual, it should be remembered that not every bank finances the purchase of business premises. We must have a minimum of 10-20% own contribution, and the maximum funding period is 25 years.
The situation is slightly different with a business loan
In this case – although with additional insurance – we can finance up to 100% of the property value (i.e. without own contribution), and the maximum financing period is, depending on the bank, 15-20 years.
Of course, both in the case of a loan for a natural person and for a company, we are able to “bypass” the requirement of own contribution, securing ourselves on additional real estate. Another issue is how you approach creditworthiness.
In the case of a loan for a natural person, in order to assess our creditworthiness, the bank may take into account not only our current income (e.g. from gainful employment) but also future revenues from the lease of purchased property.
This will definitely increase creditworthiness. In the case of a business loan, the bank may also take into account the income from the business plan of the project being carried out to assess the creditworthiness.
An interesting proposition for people who want to invest in the purchase of utility real estate is Condohotel apartments, i.e. apartments for rent in hotel facilities.
The design of the product is very simple
We buy a hotel apartment, and the developer rents it on our behalf, offering a fixed rate of return on investment. Usually, it is 7-8% a year, and the contracts are described for a period of 10 years.
The rules for financing this type of real estate are generally similar to those for commercial premises. However, some banks have additional requirements, such as the need to equip the premises with a kitchen or financing premises only covered by a lower 8% VAT.
When taking out a loan for the purchase of business premises, it should also be remembered that such interest rate is usually higher by about 2 percentage points than in the case of loans for residential premises. Therefore, the profitability of our investment and our financial capabilities should be carefully analyzed.