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What Is a Loan Against Commercial Property and How Does It Work?

A commercial property loan allows you to avail high-value funding by mortgaging commercial real estate you own. 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 offering 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.

How Does a Commercial Property Loan Work?


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. If your property is worth Rs.2 crore and the LTV is 50%, you can obtain a loan of Rs.1 crore. In contrast to loans against residential property, commercial property loans are known to extend lower LTVs. The maximum LTV offered under loan for commercial purchase is generally between 60-75%. You can use a Loan to Value Calculator to estimate how much financing you can avail of.


The commercial property loan tenor is normally lengthy, up to 18 years, and this allows for flexibility in repayment. The rate of interest for loan against commercial property is cost-effective since the loan is backed by valuable collateral. You can use an Loan Against Property EMI calculator to plan for repayment and make full or partial prepayments to reduce your net interest outgo.

Eligibility and Documents

To get a loan against commercial property in India, you must be an Indian national possessing a steady source of income. 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 of 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
  • Property-related: Buyer agreement/ title deeds (if applicable)
  • Other documents: Those pertaining to the business and legal matters

Can You Get a Mortgage on a Commercial Property?

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 legal end.