A commercial property loan is a type of secured loan. Banks provide a credit option in exchange for the pledge of commercial property. It serves in the operation of a business. If the borrower wants to buy a commercial property, he can get a loan for up to 85% of the project cost at an attractive interest rate. Many Indian banks, financial institutions, and non-banking financial companies (NBFCs) offer it.
Advantages of a Commercial Property Loan
- Tax Advantages: When purchasing a commercial property, an applicant should take advantage of several tax advantages. If he obtains a loan to buy a home, he may be eligible for a tax deduction for the interest paid on EMIs.
- Organizations such as IT companies, retail outlets, banks, and so on rent office space. Because these establishments are professionals, it is easier for commercial property owners to deal with the holders.
- Renting potential: If the borrower has unused space in their home, he may be able to generate income from it.
- Interest rate: The interest rate on a commercial property loan starts at 7.45% per annum. Because of the increased competition among financial institutions, or banks, it is the most affordable funding option.
- Loan up to 80%: The borrower can obtain commercial property loans ranging from Rs. 5 lakhs to Rs. 5 crores for a flexible repayment period of up to 15 years.
Documents Required for a Commercial Property Loan
For an individual
- Passport-sized photographs of all directors are required, as is proof of permanent address if rented.
- Copy of PAN Card and Passport as proof of identity.
- Address verification: Directors and Company.
- GST return for one year.
- Check (payable to the bank) for the processing fee.
- PAN Card for the company and all directors.
- Complete all property documentation using Map and Chain+ ATS.
- Schedule and sanction letter for the loan.
- Bank statement from the previous year for salary account.
- ITR with income computation for the last three years from-16 (if filed)
- Chartered accountant-certified list of all directors and shareholders as of date.
- Certificate of registration for VAT, SALE, SSI, and GST.
Commercial Property Loan Eligibility Criteria
Eligibility criteria for commercial property loans vary by several factors, including an applicant’s monthly salary, co-applicant income, and residency.
- An individual’s age range is between 22 and 65 years old.
- The CIBIL score must be greater than 700.
- The financial statement should be in black.
- Indian nationality.
Factors Influencing Commercial Property Lending
A variety of factors influence commercial property loans.
- Loan amount: Taking a large loan sum for a longer loan term makes it easier to repay the loan because the EMI lowers.
- Longer loan terms spread payments over a more period. If the borrower has enough income, he should choose a longer time to increase his chances of success.
- CIBIL Score: The CIBIL score is essential; an applicant must have a credit score of at least 750.
- The borrower’s age: An applicant has a crucial impact on him to pay back the debt.
When looking for a commercial property loan, compare interest rates from banks and NBFCs to find the best loan rates.
Commercial Property Loan Interest Rates
| Interest Rate | 7.25% per year and up |
| Loan Amount | From Rs. 5 lakhs to Rs. 5 crores |
| Repayment tenure | Up to 15 years |
| Processing Charge | 1% of the loan amount |