Know everything about loans against commercial property

A commercial property loan is a credit option in which a lender offers a loan against a mortgage of non-residential property or commercial real estate you own. The commercial property can be used for your business or any other profit-generating purpose. Suppose you have any high-budget expenses and need funding. In that case, you can mortgage any commercial property you use for business or any other profit-generating purpose to avail loan against commercial property. First, let’s talk about eligibility criteria and interest rates for loans against property.

Eligibility criteria for loan against commercial property

Below mentioned are a few eligibility criteria for salaried and self-employed individuals:

For salaried applicants, below is the eligibility criteria:

  • The applicant must be a residing Indian citizen.
  • The applicant must be between 28 to 58 years of age.
  • Working professionals at public or private companies or MNCs must have a minimum of 3 years of work experience.

For self-employed individuals, below is the eligibility criteria:

  • The applicant must be a residing Indian citizen.
  • Must be between 25 and 70 years of age.
  • Salary slips or bank statements to prove a steady source of income.

Always contact your lender to get more information about their eligibility criteria.

Documents required for a loan against commercial property

All applicants /co-applicants must submit the following documents and a duly signed application:

  • Latest salary slips (only for salaried applicants)
  • Bank account statements for the previous three months
  • PAN card and Aadhar card
  • Address proof
  • Copy of the documents of the property that is to be mortgaged
  • IT returns (only for salaried applicants)

Please note that the list of documents mentioned is a general list of documents required. Always contact your lender for any additional documents that may be required.

Benefits of obtaining a loan against commercial property

The following are the advantages of getting a loan against commercial property:

Larger Loan Amount: If you choose a commercial property loan in India, you can borrow up to 60% of the property’s worth or Rs. 5 crores.

Interest Rates: Because a mortgage on your commercial property secures the loan, you can get interest rates as low as 9%.

Fluid Process and Easier Terms: Commercial property loans have no end-use restrictions, and obtaining them is transparent, seamless, and rapid.

Custom Loan Solution: Each business has unique demands and criteria, so these loans are tailored to each organisation.

Factors influencing the interest rate on loans against property

  • Loan tenure– The payback duration of a loan impacts the loan against the property interest rate imposed by the bank. The shorter the repayment period higher the interest rate charged.
  • Credit Score – If you want a loan against property at a lower interest rate, you must have a credit score of 700 or higher.
  • Property type – The interest rate for a loan against property is determined by the market value and kind of property.
  • The applicant’s profile, such as age, occupation, and income, influences the interest rate for a loan against property charged by the bank.

A loan against commercial property is a beneficial financial tool that can help you lend a larger amount with an affordable interest rate. It is a secured loan typically with lower interest rates than unsecured loans. Furthermore, your chances of acquiring a loan at a cheap interest rate increase if you have a strong credit score and credit history.

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