If you find yourself in urgent need of funding, consider opting for a loan against property for immediate loan sanction and competitive interest rates. What’s more, you can even offer your commercial property, such as a retail shop or a commercial building as an asset if you are uncertain about pledging your residential property.
Availing of a loan against property is a cost-effective way to tackle your funding needs, as the loan amount can go up as high as Rs. 5 Crores, or higher if you meet the lenders’ eligibility criteria. However, just because you borrowing a large sum doesn’t automatically get you a high rate of interest. Loans against property have some of the competitive lending rates in the market presently – allowing you to address your financial requirements without jeopardising your investment goals.
The eligibility parameters borrowers are expected to meet for a loan against commercial property are easy and direct, letting you complete your loan application and verification process in just a handful days, with the possibility of a speedy disbursal as well. To know more about the benefits and ways to apply for a loan against commercial property, read on.
Benefits of Commercial Property Loans
A loan against commercial property offers the following advantages:
When you avail of a commercial property mortgage, you can secure loan amounts worth Rs. 5 Crores, or higher, depending on your needs and financial profile. This sizeable sum can help address a variety of expenses, such as business expansion costs.
Since the loan is obtained by placing your commercial property as security, you can get attractive interest rates that ensure manageable EMIs. The rates depend on lender policies and the borrower’s loan eligibility – but if planned for well, you can hope to secure a low interest loan against commercial property.
Since it has no end-use restrictions, this loan type is designed to address any specific requirements you may, pertaining to you, or your business’s finances.
Factors That Affect a Loan Against Commercial Property
When individuals opt for a commercial property loan, they should consider the three requisite loan elements mentioned below:
When availing loans against any commercial property, it is essential to have the mortgaged property registered in your name. Loan borrowers must own the property they wish to offer as collateral. The commercial property could be a grocery shop, office building, manufacturing shop, commercial real estate, hotel, restaurant, medical centre or similar workspaces.
The loan-to-value or LTV ratio helps the lender decide the volume of funding, the applicant is eligible for. The lender determines this by evaluating your property collateral, based on its build, infrastructure and amenities and market value.
When availing of commercial property loans, borrowers can advantage from lengthy repayment tenors, extending up to 18 years, to enable comfortable repayments. To help you plan your repayment schedule better, you can access a loan against property EMI calculator to realistically gauge the implications of borrowing a commercial loan against property.
Commercial Property Loan Eligibility
Every lender has their own set of eligibility criteria. Applicants must meet these requirements to get an approval on their loan request. Some common eligibility parameters include:
● The applicants should be resident citizens of India. The properties they wish to mortgage must be in the cities where the lender has their branch offices.
● They should ideally be between the age of 28 and 58 years. Note that the maximum age is considered at the time of loan maturity.
● They must be employed in the public or private sector, or in a multinational firm; with a minimum work experience of three years.
● The preferred salary scale may vary from city to city, but is generally, in the range of Rs. 25,000 to Rs. 35,000.
● The applicant must be a residing citizen of India and the property owned should be located in the cities where the lender has their branch offices.
● They should ideally be in the age group of 25 to 70 years. Note that the maximum age is considered at the time of loan maturity.
● Applicants must have a business vintage of at least five years in the current company.
● They should have a steady source of income, preferably between Rs. 25,000 and Rs. 35,000. The income range could differ across cities.
Commercial Property Loan Documentation
Those who want to apply for a loan against commercial property, must possess the following documents:
● Identity proof - PAN card, Aadhar card, passport, voter's ID or driving license (any one)
● Address proof - Aadhar card, voter's ID, passport, ration card, or utility bills like electricity bills (any one)
● Property documents - Title documents, paperwork related to mortgage and ownership
● PAN card and Form 60
● Proof of employment - Employer-issued identity card
● Income proof - Income tax returns of previous year
● Salary slips of past two months
● Bank account statements of last three months
● Employment proof - Business registration certificate, partnership agreement, etc.
● Income proof - Income tax returns for the last two years
● Balance sheet, profit, and loss statements of the company
● Bank account statements for the last six months
Summing Up
Commercial property is a type of property that is meant to generate income and profit, so what better asset to mortgage than a commercial property to secure larger funding. Before you apply for a loan against a commercial property, use online tools like loan against property calculators and LAP eligibility calculators to compare the different loan deals available in the market and to assess your loan eligibility respectively.
