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A Complete Guide on Commercial Property Loan in India

  • 04-Mar-2022
A Complete Guide on Commercial Property Loan in India

India becomes the 2nd fastest-growing economy worldwide. In the last few years, there has been a rapid rise in demand for commercial property. But for most businesses, owning a commercial property is a tough task.  

As compared to residential property, commercial property is highly-priced and expensive. Hence, it requires a large sum of money; Be it an office space, commercial shop or warehouse a need of space for establishing a business or scaling up is required for all units. 

Commercial property loans can be used for varied purposes including purchasing office space, office complexes, restaurants, hotels..etc. 

Get a loan for commercial property purchase for attractive rates. Commercial property loans are offered by several banks and financial institutions. 

Commercial Property Loan – Details 

Interest Rate 7.25% Onwards per annum 
Processing Fee Up to 1% on loan amount 
Loan Amount Starting from Rs. 5 Lakh to Rs. 5 Cr 
Repayment Tenure Up to 15 Years 

Typically, the purchase of a commercial property can be broadly classified into 2 categories: 

  1. Office Space
  2. Retail Outlet

These 2 categories can be further divided into another 2 subcategories such as under construction and ready to occupy. 

Generally, lenders prefer financially funding to be ready to occupy commercial property rather than under-construction property. 

Key features- 

  • Loans for under construction and ready to occupy projects
  • Balance transfer facility offered to lower interest rate & EMIs
  • Avail loan up to 85% of project cost
  • Get a loan at attractive interest rates
  • Easy & minimum documentation
  • Flexible repayment tenure up to 15 years

Commercial Property Loan Interest Rates by Top Banks 

Bank NameInterest Rate
Kotak Mahindra Bank 7.25% Onwards 
Axis Bank 7.50% Onwards 
ICICI Bank 7.75% Onwards 
HDFC Bank 7.65% Onwards 
Bank of Baroda 8.00% Onwards 
Bank of India 8.35% Onwards 
State Bank of India 8.45% Onwards 
Punjab National Bank 8.70% Onwards 
Indian Bank 8.80% Onwards 
IndusInd Bank 9.00% Onwards 
Canara Bank 10.70% Onwards 

Eligibility Criteria 

Self-employed individuals who are availing commercial property loans are required to meet the eligibility criteria set by lenders. 

  • Applicant must be a resident of India
  • Age should be above 22 at the time of loan application and below 65 at the time of loan maturity
  • Credit score must be above 700
  • Minimum 3 years of business continuity
  • Self-employed individuals should have a stable source of income.

The applicant is further classified into two types - 

Self-employed Professionals 
  • Chartered Accountants
  • Doctors
  • Architects
  • Lawyers
  • Company Secretaries. Etc.
Self-employed Non-Professionals 
  • Traders
  • Commission Agents
  • Contractors. Etc.

Document Required 

Besides, fulfilling eligibility requirements that are set by lenders, the applicant must submit the following documents to qualify for a loan. 

  • Duly filled loan application along with 2 passports sized photographs 
  • Proof of Identity: - Aadhaar Card/PAN Card/driving license/passport ..etc. 
  • Address Proof: Aadhaar Card/PAN Card/ Utility Bill/Electricity Bill/rent/lease agreement..etc. 
  • Income Proof: - ITR along with computation for the last 2 years, balance sheet, profit & loss statement for last 3 years 
  • Other Mandatory Documents: - Certification of incorporation, Company PAN Card, GST Certificate, MOA/AOA, List of shareholders, Bank Statements, Details of the existing loan if applicable. 

How to apply for Commercial Property Loan? 

Step 1: - Visit Financeseva to Compare & choose the offer that suits your requirements.  

Step 2: - Simply click on the get quote straight to your preferred lender. Feed the required details & submit the same.  

Step 3: - Within 24 hours representative will be contacting you to explain product features & rates. Only with your final confirmation application will be processed ahead. 

Factors That Affect Approval of Commercial Property Loans 

As a borrower, you must consider certain things to keep in mind before approaching any lender for commercial property loans as given below: 

Builder’s Profile – One of the prime factors that affect approval is the builder profile, the background of a developer who is constructing the property. In such scenarios, lenders pay special attention to under-construction property as it carries a high risk of funding. 

Property Valuation - Borrowers who request a higher loan amount as compared to actual property costs are likely to be unqualified for loans. The lender conducts an LTV loan to value ratio to calculate the value of the loan provided against the property.  

Technical Evaluation – When it comes to commercial property, lenders double-check the technical specification. This specification includes fire exits, emergency execution, elevators, lifts and so on.  

Also Read:- Top 5 Startup Business Loan Scheme by Indian Government

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