Commercial Property Loan

Following are the commercial property loan interest rates of top lenders in India:

You can also check Loan Against Property Interest Rates 

The key features and benefits of commercial real estate loans are mentioned below:

• Customised loan repayment options to suit your requirements.
• Easy and minimal documentation.
• Long tenure up to 15 years.
• Higher loan amounts than personal loans or business loans because commercial properties are revenue-generating assets.
• Commercial property loan rates are lower than personal loans since the former is considered a secured loan.
• Apart from commercial property interest rates, the processing fee is also low for these loans.
• You can opt for a shorter EMI as compared to unsecured loans.
• Under Section 24, you can avail of tax deductions on the interest payments towards commercial property loan EMIs. 
• Investing in a commercial property can increase your net worth as the property's value appreciates over time.
• You can avail of a loan for construction of commercial building, loan to buy commercial property, commercial shop loan or a commercial property loan for other such purposes.
• A commercial property can generate rental income for you, which can help you offset the EMI payments.
• You can also avail of a loan against commercial property or a loan against property for business.

You can also check Loan against Agriculture land

Following are some common eligibility criteria for commercial property purchase loans:

• The applicant should be an Indian resident to avail of a commercial property loan from commercial bank or any other lender. 
• The age of the borrower must be 28 – 58 years (if salaried) and 25 – 70 years (if self-employed). 
• The applicant should be employed in the public, private or MNC sector.
• The applicant should have a regular source of income.
• The income of the applicant must be at least Rs. 25,000 to Rs. 35,000 (varying from one city to another).
• The applicant should have a work experience of at least 3 years (if salaried) and 5 years (if self-employed).

You can also check Loan Against Property Eligibility from Top Banks Online.

To avail of a commercial building loan, you must furnish the documents mentioned below along with completed loan application form (duly filled in affixed) with 3 passport-size photographs:

• KYC documents: PAN Card or Form 60 
• Identity and current address proof (any one): Valid Passport, Driving License, Voter ID Card, Job Card issued by NREGA, Letter issued by the National Population Register, proof of possession of Aadhaar Number.
• Income documents: 
  • Salaried Applicant/ Co-applicant/ Guarantor: Salary Slip/ Salary Certificate of last 3 months, copy of last 2 years’ Form 16/ ITR, acknowledged by IT Dept.
  • Non-Salaried Applicant/ Co-applicant/ Guarantor: Business address proof, ITR of last 3 years, Balance Sheet and Profit & Loss Account of last 3 years, Business License Details (or equivalent), TDS Certificate (Form 16A, if applicable), and Certificate of Qualification (for CA, Doctor & other professionals).
• Property documents:
  • Copy of the Allotment Letter/ Buyer Agreement
  • Title Deeds including previous chain of property documents
• Other documents: 
  • A processing fee cheque in favour of the lending institution
  • Details of ongoing loans (if any) of the individual and business entity
  • Own contribution proof

You can also Check the necessary Documents required for Loan Against Property

If you are planning to apply for a commercial land loan, you must keep the following factors in mind to aid your decision:

• Eligibility and documentation requirement: Checking your eligibility for the loan is the first thing you must do. Each lender has its own eligibility parameters. Make sure you fulfil the criteria of the preferred lender and have all the required documents in place before applying for the loan. 
• Interest rates and other charges:  Interest on commercial property loans and charges can differ from one lender to another. To get the lowest interest rate for commercial property loan, you must do a thorough research first. Knowing the interest rates, processing fees, prepayment penalties, and other charges is another essential factor to be considered. 
• Loan-to-value ratio: The loan-to-value (LTV) ratio is the percentage of the property’s market value that can be offered as a loan amount. The LTV usually ranges from 75% to 90% (depending on the policy of the lender). Also, the loan value for a commercial property loan for salaried person can be different from a self-employed individual.
• Tenure: The tenure is the period within which you will have to repay the loan. It can usually range up to 15 years (depending on the lender’s policy). You must choose a tenure that you will be able to repay conveniently without any default.
• Technical specifications of the property: Your lender will check the technical specifications of the property to ensure that the property complies with all the safety and environmental regulations. These specifications usually include fire safety measures, elevators, civic amenities, etc.
• Property age: The age of the property is also an important factor, as most lenders prefer to fund properties that are not too old.
• Area: The area as well as size of the property are also important. Lenders may even have a minimum property size criterion in place.
• Developer’s profile: It is also crucial for the lender to check the property developer's profile and financial stability, especially for under-construction properties. 
• Regulatory approvals: The property must have clearance from all government and municipal departments before the lender disburses the loan. The required approvals may differ from one location to another.

You can also Check Loan Against Property without Income Proof and ITR

Follow the steps given below to apply for commercial real estate construction loans or other forms of commercial property loans.

• Find a lender that offers this type of loan.
• Once decided, fill out an application form online or offline and provide the documentation required, such as income proof and financial statements.
• The lender will review your application and documents to decide whether or not to approve your loan request.
• If approved, you will need to sign a loan agreement and make a down payment.
• Once the loan deal is finalized, the amount will be disbursed for your use.

• The eligibility and document requirements may differ slightly.
• The loan-to-value (LTV) ratio is lesser for a commercial property loan than a residential property loan. 
• The interest rate and processing fee for residential home loans are usually lower than for commercial property loans.
• Lenders are quite rigid about the builder's profile and reputation for commercial property (especially if the property is under construction). 
• Commercial properties must adhere to the technical specification requirements of the lender. 
• The commercial property builder must obtain all compulsory approvals and clearances from different authorities. There should not be a risk of demolition on the property due to any remaining approval. The same rules are applicable to residential buildings; however, they are stricter when for commercial properties.
• The tenure for commercial property is lesser in comparison to housing loans for residential property. 
• The loan margin is also lesser for commercial property loan as compared to housing loans. 
• A commercial property loan is usually more expensive in terms of your monthly financial budget. However, the return on the investment in commercial property is always higher than a residential property.