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Know about commercial property loans that provide businesses with tailored financing solutions offering flexible terms, competitive interest rates, and long repayment periods to support growth and cash flow stability.
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A loan against commercial property is an increasingly popular financial option for individuals and businesses looking to unlock the value of their property without selling it. People opt for this type of loan primarily because it allows them to access substantial funds at lower interest rates, while retaining ownership of their assets. The flexibility in loan usage, longer repayment tenures, and the ability to secure high loan amounts make it a great choice for various purposes. These include business expansion, debt consolidation, or managing large personal expenses.
Most banks offer a commercial property loan amounting to about 60% of the property’s market value. This can help you meet big-ticket expenses easily.
As it is a secured loan, financial institutions offer these loans at lower interest rates. The commercial property loan interest rates usually start as low as 9% p.a.
Depending on your eligibility and the lender’s policies, you can benefit from a tenure of up to 25 years.
This makes it easier for you to manage your loan repayments without drastically affecting your finances.
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A commercial property loan does not have strict eligibility criteria or require a lot of paperwork. This makes them a great choice during emergencies when you require funds.
If you wish to opt for a commercial property loan in India, here are essential aspects that you must consider before applying.
If you choose to opt for a commercial property loan, you must first find out the type of commercial property you can mortgage. You can get a loan against commercial property like a grocery shop, office building, manufacturing shop, and so on.
If you are applying for a commercial property loan against a project that is still under construction, run a background check on the builder. Also, ensure that the builder has already secured all the requisite approvals for the construction. If there are any discrepancies in the builder’s records, your loan may be rejected.
The amount of loan that you can get with a commercial property loan depends on the market value of the property. This is called the Loan-to-Value (LTV) ratio. The LTV ratio of commercial property loans is generally lower than that of loans against residential property.
Commercial property loans have a longer tenure in comparison to other loans. It can range up to 15 years, enabling you to repay the loan at a more gradual pace and resulting in a lower strain on your finances. To plan your finances better, you can use a Loan Against Property EMI Calculator and compute the EMIs you are likely to pay.
Refer the following table:
Lender |
Max. Loan Amount |
Starting Interest Rate |
|---|---|---|
Bajaj Housing Finance |
₹5 Crores |
9.75% p.a |
Sammaan Finserve |
₹10 Crores |
9.75% p.a |
L&T Finance |
₹7.5 Crores |
9.60% p.a |
PNB Housing Finance |
₹15 Crores |
8.50% p.a. |
India Shelter |
₹0.20 Crores |
15.00% p.a. |
Shubham Housing Finance |
₹0.20 Crores |
13.90% p.a. |
*Disclaimer: The mentioned details are subject to change at the lender’s discretion.
To get a commercial property loan, you need to fulfil some basic eligibility criteria. Here is a table highlighting some common criteria that a majority of lenders may require you to fulfil.
You should be an Indian citizen
Your age must be between 21 and 70 years
You should have a minimum work experience of 3 years
You must be employed by a public company, private firm, or MNC
Ideally, you must have a CIBIL score of 750 or more
You must be an Indian citizen
Your age must be between 21 and 70 years
Your current business should have a vintage of at least 5 years
Ideally, you should have a CIBIL score of 750 or more
*Disclaimer: The eligibility criteria may differ from one lender to another. The details mentioned above are for informational purposes only.
Provided below is a list of documents that are usually required to apply for a commercial property loan.
Proof of Identity
PAN card
Aadhaar card
Passport
Voter ID
Driving licence
Proof of Address
Aadhaar card
Voter ID
Passport
Ration card
Utility bills
Property Documents: Title documents and other paperwork related to mortgage and ownership
PAN details or Form 60
Proof of Employment:
For Salaried Individuals - Employer-issued identity card
For Self-employed Individuals - Business registration certificate, partnership agreement, and so on
Proof of Income:
For Salaried Individuals - Last year’s ITR, salary slips of the last 2 months, and bank account statements of the last 3 months
For Self-employed individuals - ITR of the last 2 years, balance sheet, P&L statement, and bank account statements of the last 6 month
Follow these simple steps to apply for a commercial property loan on Bajaj Markets:
Click on the ‘CHECK OFFER’ option on this page
Provide your personal and property-related details
Choose the lender from the list provided
Enter the required loan amount and tenure
Check the details entered and submit the application
Following this, a representative of the loan provider will reach out to you for further proceedings.
Yes, you can get a loan against commercial property. However, you must note that the commercial property loan Loan-to-Value (LTV) ratio is limited to about 60%. On the other hand, it lies between 75% - 90% in the case of residential properties.
A home loan is used to buy or build a residential property, with the home itself acting as collateral. In contrast, a loan against commercial property uses commercial property as collateral, and the funds can be used for various business and personal needs. Home loans typically have lower interest rates than loans against commercial property.
Technically, there is no limit to the number of commercial loans you can have. However, financing the same can prove to be a challenge.
The ideal credit score required for a commercial property loan is 750 or more.
Although the RBI has not issued any directive for the same, it is advisable to insure your property for any calamities, prior to applying for the loan.
You can benefit from a tenure of up to 25 years with a loan against commercial property.
The LTV ratio is the amount a loan provider is willing to lend compared to the market value of the mortgaged property. This ratio is determined on the basis of your eligibility and the lender’s policies. Usually, loan providers offer an LTV of about 50% to 60% for commercial property loans.
