Introduction to the Mortgages for Buying Commercial Property
Starting a business is no easy task. You have to worry about what you are going to do and how you are going to do it. You also need to worry about the infrastructure of your new business and find a place to work from. That, finding a place to work from, is one of the main issues that haunts any new business. It is one that even haunts businesses that are looking to expand and need more space or new outlets. Even if you have found the ideal place to work from, your next challenge is to find the funds to acquire that place and that is where the mortgage for buying commercial properties comes in.
Features of Loan for Commercial Property
The features of a loan for a commercial property can differ from one bank to another but some of the most common features are:
- Loan Amount: Depending on the purpose of the loan and the bank you approach you could borrow anything from AED 10 million to AED 50 million or more.
- Interest Rates: The interest charged is based on the discretion of the bank and can be from 5% per annum to 7% per annum.
- Tenures: The tenure also depends on the bank you approach but can be from 10 years to 15 years.
- Prepayments: Many banks allow for prepayment of these loans. The fee charged for such prepayments can be about 1% of the outstanding loan amount.
- These loans can be taken to cover the cost of the land as well as the construction of the property.
Eligibility Criteria and Documents Required
To be eligible for this loan, you will need to meet certain eligibility criteria and furnish certain documents. Here is what you will need.
In case of most banks, to be able to take this loan, you must either be a UAE national or an expatriate with a valid residence visa.
- Your employment status will have to be either salaried or self-employed.
- You will also need to have a minimum monthly income of at least AED 15,000 with some banks. Other banks may require higher minimum monthly incomes of AED 40,000 to AED 50,000 or more.
- It may also be required that your business be registered in the UAE.
- The basic documents required will be the application form.
- To support that application form, you will need a copy of your passport and visa.
- Salary certificates may also be needed.
- Property documents like the deed, sales agreement, approved designs of the property, etc. can also be asked for.
- Bank statements for 6 month and liability letters might also be asked for.
Benefits of Mortgages for Residential Properties
- This loan can be taken for office spaces, industrial properties, warehouses or for shops.
- It can also be taken against the income that will come in from rents once the building is completed and occupied.
- Even though the documents required, seem vast in quantities, many banks try their best to keep it to a minimum to expedite the processing of the application.
- Most of these loans can be taken for properties located anywhere within the UAE.
- In some cases, the repayment period will not start till the building is constructed.
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Frequently Asked Questions - FAQs
Q. Can a non-resident take these loans?
A. No. Most of these loans are available only to UAE nationals and expatriates with a valid residence visa.
Q. Are these loans restricted to commercial properties only?
A. In most cases, these loans are specific to commercial properties but some institutions may even offer these loans for the purchase or construction of residential properties.
Q. When does the loan repayment period start?
A. If the property is under construction, then the repayment will start once the construction is complete.
Q. How do I pay back the loan if I am building the property and renting it out?
A. If you are going to rent the space in the property then you can pay the loan from the income that will come in from the rents paid.