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Commercial property loan- Here is what you didn’t know

Similar to how many people dream of owning a home, many people also dream of having a private office. To make this dream a reality, lending institutions created the opportunity to obtain a commercial property loan. This loan makes it easier to purchase office space, rent retail space, or renovate a commercial building. The purchase of any commercial property under this loan will be accompanied by the taking of collateral, so bear that in mind. All different kinds of workplaces, hotels, restaurants, and shops are considered commercial assets. An opportunity to get the funding required to invest in the company is provided by a commercial property loan.

How do loans for commercial property work?

In contrast to a house loan, a commercial property loan is used to secure loans for business property. Your ability to pay for various expenses is determined by the current value of your commercial property. Any number of things could be involved, including further education, business growth, union, and debt relief. If you meet the basic requirements for a mortgage and have the required documents on hand, you can obtain a commercial property loan.

You must be an Indian national with a reliable source of income to obtain a commercial property loan in India. Additionally, you need to be a member of the appropriate age group and have legal title to a business property. Ideally, you should have a credit score of 750 or higher.

You might require the following list of documents:

  • PAN card, voter ID, driver’s license, or passport are acceptable forms of identification to prove your identity and place of residence.
  • Bank account statements, tax returns, and other documents serving as proof of income.
  • Property-related documents such as the buyer’s contract and title deed (if applicable)
  • Other paperwork: records relating to the company (in the case of self-employed applicants)

Considerations to make before applying for a commercial property loan

Evaluate the following considerations to help you decide if you want to take out a commercial property loan:

  1. Required Documents & Eligibility

You must first determine whether you are eligible for the loan or not. When applying for a commercial property loan, make sure you meet the requirements and that you have all the proper documents.

  • Ratio of Loan to Value

The loan-to-value ratio measures how much of a property’s market worth is represented by the loan amount that is being used. Most often, it reaches 65%.

  • Tenure

You will be paying back the loan throughout your tenure. Decide on a duration that you believe you can repay without going into default.

  • Rates of Interest and Fees

Before deciding on a lender, make sure to compare their offers to other options so you can receive the greatest offer.

  • Area

Lenders also take into account the property’s size or area, and some of them may even have minimum property size requirements.

  • Building Age

The age of the property is also a crucial factor since most lenders prefer to finance properties that aren’t too old.

  • Regulatory Acceptances

Before the commercial loan can be granted, the commercial real estate must receive approval from all governmental and local agencies. In each site, different approvals are needed.

Advantages of Commercial Property Loans

  • Greater loan amount: You can obtain a greater loan amount. This is so because commercial buildings are valued higher because they are assets that generate income.
  • Rental income: Rent from a commercial property can be used to pay off your EMI obligations.
  • Lower interest rates: Because commercial property loans are considered secured loans, they often have lower interest rates than unsecured Lower interest rates.
  • Property value appreciation: Investment in commercial property could help you grow your net worth when the value of the property rises over time as a result of local demographic and infrastructure changes.
  • Tax advantages: Section 24 allows you to deduct interest payments made toward your business property loan EMIs from your taxable income. Long-term, you may be able to save a considerable amount of funds by doing this.
  •  Shorter EMI: A shorter EMI is an option in comparison to personal or business loans, which may have terms of up to seven years.


A commercial property loan, a retail space lease, or a loan for company property renovation are all made possible by commercial real estate loans. Due to its flexibility, affordability, and shorter-term tenure as compared to a house loan, a commercial property loan is an ideal option for business needs. As a result, loans for commercial real estate are a wise choice for buying property. 

Ahsan Khan
Ahsan Khan
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