What are the criteria for industrial property financing?
Banks generally lend up to 70% of the value of the property.
In order to qualify for a bond, the property must have been purchased at a fair market value. If the price paid is over market value, the banks may decline to finance the purchase or adjust the loan to cost to a lower ratio to compensate for the high price paid. If one is fortunate to buy a property at a ‘bargain’ price the banks may grant more than the 70% loan to value.
An important factor that banks will consider when being approached for funding is the financial standing of the borrower. In the case of a business applying for a loan to fund the purchase of an industrial property to accommodate themselves, the financial standing of the business plays an important role in determining the risk factor.
The directors will have to sign personal surety for the loan.
The interest rate that is charged by banks is determined by the risk involved but can vary from half a percent below prime to a couple of percent above prime. The loan usually needs to be repaid over a period of 10
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