A commercial property loan allows you to avail of sizeable funding by mortgaging commercial real estate owned by you. The commercial property may be the one you use for your business or any other profit-generating purpose. You can opt for a commercial property loan in case you are looking for ample, affordable financing; for instance, to expand your business or buy expensive machinery.
Here, a commercial property loan refers to a loan against commercial property, wherein you raise funds by mortgaging commercial real estate you already own. Sometimes, however, lenders refer to commercial property loans as loans given to purchase commercial real estate; for instance, in the case of a loan for a commercial shop.
Collateral
To obtain a commercial property loan you must firstly mortgage a commercial premise you own. Depending on your lender’s criteria, this could take the form of an office building, manufacturing shop, or even a grocery store.
Loan Amount
The commercial property LTV or loan-to-value determines how much funding you can obtain. For instance, if your property is worth Rs.2 crore and the LTV is 50%, you can obtain a loan of Rs.1 crore. The LTV offered under a loan against property is generally in the range of 60-75%. You can use a Loan to Value Calculator to estimate how much financing you can avail of.
Repayment
Commercial property loan tenor is normally lengthy, up to 18 years, which allows for flexibility in repayment. Commercial property loan interest rates are cost-effective, since the loan is backed by valuable collateral. You can use our Loan Against Property EMI calculator to plan for repayment and make full or partial prepayments to reduce your net interest outgo.
For self-employed individuals the interest rate for commercial property loan is between 9% to 14%. A commercial property loan, also known as a commercial real estate loan, is a type of loan specifically designed to finance the purchase or development of commercial properties. Commercial properties are real estate properties that are used for business or investment purposes rather than for residential purposes.
To get a loan against commercial property in India, you must be an Indian national possessing a steady source of income. Further, you must belong to the eligible age bracket (varies for salaried and self-employed individuals), and you must own a commercial property that is free of legal concerns. It is ideal to have a CIBIL score 750 or more.
The documents you may need include:
- Proof your identity and residence: PAN card/Voter’s ID/Driving License/Passport
- Proof of income: Bank account statements, Income Tax Returns, etc.
- Property-related: Buyer agreement/title deed, etc. (if applicable)
- Other documents: Those pertaining to the business (in the case of self-employed applicants)
Also Read: About Loan Against Property Eligibility
Please note that this is list is indicative and you may need to show more documents, upon further inspection.
Yes, you can get a loan against commercial property in India from Bajaj Housing Finance. Once you do so, you will obtain ample, economical finance that you can funnel towards any expense.
Applying for a Commercial Property Loan is simple and straightforward. Once you have checked all the loan details and assessed the EMIs payable, complete the following steps to apply for a Property Loan.
- Fill the Loan Against Property application form with personal details, such as name, date of birth, address, and contact details
- Provide your income details to help with the selection of the best deals as per your financial standing
- Proceed to ‘submit’ the application form
- Our representative will get back to you in 24 hours and guide you through the next steps, which will include document submission and verification.
- The biggest advantage of a Commercial Property Loan is the low interest rate at which you can get a loan.
- The second advantage is that you get a good LTV ratio of up to 90% of the property value (depending on the loan amount you seek)
- The third advantage of keeping a ‘commercial’ property as collateral is that in the unfortunate event that you are unable to repay the loan, your residential property remains untouched.
FAQ
Yes, you can take a commercial loan against property by keeping your commercial property as collateral.
The lowest interest rate that you can get on a commercial loan is 9.85%* for a self-employed individual.
Home loans are used to construct or buy a property by keeping the same property as security. A Commercial Loan Against Property can be used to secure a loan to be used for any end purpose, by using an existing commercial property as security.
You can have more than one commercial loan provided the lender deems you capable of paying multiple EMIs simultaneously.
Investing in a commercial property helps you to diversify your portfolio and earn higher returns. You can rent out the property and enjoy the benefits of regular flow of higher rental income. It also has high appreciation rate; hence, you should invest in a commercial property.
There are several eligibility parameters to become eligible for a business or commercial property loan. You should have a cibil score of 750 or higher. The age should be between 25 to 70 years.
The loan amount for commercial property loan can be determined by LTV. It can be 75-90% of the residential property and 50-55% of the commercial property.
Yes, you can avail of a loan on commercial property, given you fulfill the eligibility criteria. It depends on your age, repaying capacity, credit score, etc. You should be a resident of India.
