Navigate Commercial Property Loans with Confidence

In the dynamic landscape of business, financial flexibility has become paramount. It allows individuals to access affordable financing to help them escape the burden of debts, and swiftly make investments whenever opportunities arise.

To maximise financial flexibility, one may choose to apply for a commercial property loan which is secured by the mortgage of business properties. Read further to know everything about this loan type.

What is a commercial loan?

A loan against commercial property helps an individual finance the expansion of their business or with the purchase of commercial properties like land, factories, warehouses, etc. Commercial loans are exclusively taken for business-related activities.

What are the components of a commercial property loan?

A commercial loan involves the following things:

  • Collateral

An individual can avail a commercial property loan by first mortgaging any owned commercial ground, such as an office building, factory, or warehouse.

  • Amount of loan

The financing an individual can avail is determined by the commercial property LTV ratio or loan-to-value ratio. Generally, an individual applying for a loan against property can be offered an LTV in the range of 60-75%.

  • Repayment

A commercial loan tenor can extend up to 17 years, this allows an individual to enjoy repayment flexibility. Moreover, the loans are secured by collaterals, making commercial loan interest rates cost-effective.

What is the eligibility for applying for a commercial property loan?

The eligibility criteria for a loan against commercial property are outlined below:

  • All applicants must be Indian residents.
  • Salaried applicants must be aged between 28 to 60 years, while self-employed applicants between 25 to 70 years.
  • A salaried must be employed for a minimum of 3 years by an MNC or a public/private company.
  • Self-employed should have a business vintage of at least 5 years.
  • CIBIL score for both salaried and self-employed applicants should be above 750.

What are the documents required for a commercial property loan?

An individual should provide the following documents to continue with the processing of a loan against a property application:

  • A PAN card or Form 60 are mandatory documents.
  • Aadhaar card, passport, voter card, or driving license as address and identity proof.
  • Last 3 months’ bank account statements, latest salary slip, IT returns, etc for income proof.
  • If applicable, applicants must also provide buyer agreement or property title deed documents.
  • A self-employed applicant may also provide other documents linked to the business.

How to apply for a commercial property loan?

It is simple and easy to apply for a commercial property loan. Following are the application steps:

Step 1: Go to the official website of the chosen financial institution and tap on the ‘loan against property application form’ option.

Step 2: Select ‘employment type’ and ‘loan type’.

Step 3: Fill out the application form by providing details such as name, contact details, address, PAN number, monthly salary or annual turnover.

Step 4: Submit the application form and complete the loan application process.

After submission of the form, representatives of the financial institution will reach out to the applicant within 24 hours for the documentation and verification process.

What are the benefits of availing of commercial property loans?

The following points outline the benefits of a commercial property loan:

  • Individuals can enjoy low interest rates by availing this loan.
  • Depending on the loan amount, one can get an LTV ratio of up to 90%.
  • Individuals can enjoy loan against property tax benefits by claiming tax exemption under section 37(1) of the Income Tax Act.

Frequent borrowers can obtain pre-approved deals on home loans, loans against property, etc, that the leading financial institutions offer. One can seamlessly continue with their property loan application process. They just need to visit the lenders’ official website and check for eligibility by entering their names and other supporting details.

Commercial property loans can allow one to enjoy financial flexibility. They can also enjoy attractive interest rates that several lenders offer on these loans. One can also tax benefits and save money in the long run. However, to make an informed decision, individuals should do extensive research and compare the products offered by different lenders.