Welcome to our comprehensive “List of Commercial Property Loan Rates in India 2023.” If you’re considering investing in commercial real estate or looking to refinance an existing property, having access to up-to-date loan rates is crucial. This curated list provides valuable insights into the current interest rates and terms offered by various lenders across India. Make informed decisions and discover the financing options that best align with your commercial ventures. Whether you’re a seasoned investor or a budding entrepreneur, this compilation will serve as a valuable resource to navigate the dynamic landscape of commercial property loan rates India this year. We will also see the various commercial property interest rates.
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What are Commercial Property Loans?
- A commercial property loan, also referred to as a commercial real estate loan, is a specialized type of financing used for acquiring or refinancing commercial properties like office buildings, warehouses, retail spaces, apartment buildings, and other commercial real estate assets.
- These loans cater to businesses and investors seeking financial support for commercial property transactions. Due to their larger size and complexity compared to residential loans, they are tailored to meet the unique requirements of commercial ventures.
- Banks, credit unions, and financial institutions typically offer commercial property loans. The loan can be secured by the commercial property being purchased or refinanced, along with other assets owned by the borrower.
- Terms and conditions for commercial property loans vary based on the lender and borrower’s specific needs. Generally, these loans have longer repayment periods, higher interest rates, and more stringent underwriting criteria compared to residential mortgages.
But what is the rate of interest for loans against commercial property?
Table of Commercial Property Loan Rates in India 2023
But what are the current commercial property loan rates/ current commercial property loan interest rates or commercial property loan rates today?
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|Name of Bank||Term of Loan (in years)||Processing Fee||Interest Rate||Lowest EMI||Extra Benefits|
|Karnataka Bank||5||1 percent||10.50 – 13.20 percent||Rs. 1349||Easy application processHigh loan amounts|
|DCB Bank||5||1 percent||9.75 – 10.50 percent||Rs.1059||Versatile repayment alternativesHassle-free online application process|
|L&T Finance||5||1 percent||11.00-15.00 percent||Rs. 1137||Generous loan amountsPersonalized repayment choices|
|Yes Bank||5||1 percent||9.05-11.05 percent||Rs. 1017||Attractive interest ratesAdaptable repayment alternatives|
|Punjab National Bank||5||0.75 percent||9.05 – 11.05 percent||Rs. 1269||Expedited processingAttractive interest rates|
|Standard Chartered Bank||5||Rs. 11k||8.75 – 11.05 percent||Rs. 999||Substantial loan amountsVersatile repayment choices|
|IDFC First||5||1 percent||9.00-12.05 percent||Rs. 1012||Personalized repayment choicesFacility of balance transfer|
|Kotak Mahindra Bank||5||0.75 percent||8.90 – 9.85 percent||Rs. 1261||Versatile repayment alternativesHassle-free online application process|
|Axis Bank||5||Rs. 5k||8.00 – 10.05 percent||Rs. 956||Substantial loan amountsExpedited processing|
|HDFC Bank||5||0.75 percent||9.05 – 11.05 percent||Rs. 1269||Attractive interest ratesAdaptable repayment alternatives|
But what are some of the lowest interest rates for commercial property loans? Commercial property loan interest rates SBI has the lowest interest rate which stands at 7.15 percent per annum.
Also, as can be seen above, some of the cheapest commercial property loan rates include Kotak Loan for Commercial Property Rate of Interest with 8.90 – 9.85 percent and Axis Bank Commercial Property Loan Interest Rate with 8.00 – 10.05 percent. ICICI Bank Commercial Property Loan Interest Rate also has 9 percent-10 percent.
Eligibility for Commercial Property Loans
|Age||25 years-70 years||28 years-58 years|
|Residency||Should be a resident and citizen of India||Should be a resident and citizen of India|
|Status of Employment||Should have a consistent income source||Employed MNC, private or public sector|
|Experience||Must have more than 5 years of experience||Must have more than 3 years of experience|
|Income||The range of income varies depending on the city, with amounts starting from Rs. 25k – Rs. 35k.||The range of income varies depending on the city, with amounts starting from Rs. 25k – Rs.35k.|
Documents Required for Commercial Property Loans in India
|Documents||Self-Employed Non-Professional||Self-Employed Professional||Salaried|
|Business’ Proof of Existence for 3 years & Business Profile||Yes||No||No|
|Certificate of Education||No||Yes||No|
|CA Certified/ Audited Balance Sheet & Profit & Loss Account For Past 3 years||Yes||Yes||No|
|IT Returns & Computation of Income for Past 3 years||Yes||Yes||No|
|Approved Plans & Documents of Property title||Yes||Yes||Yes|
|Cheque For Processing Fee||Yes||Yes||Yes|
|Salary slips of Past 3 months||No||No||Yes|
|Bank statements of Past 6 months||Yes||Yes||Yes|
|Proof of Age, Residence, and Identity||Yes||Yes||Yes|
|Application form with Signature and photograph||Yes||Yes||Yes|
What Affects Commercial Property Loan Interest Rates in India?
Several key factors influence commercial property loan interest rates in India, shaping the terms and costs for borrowers:
1. Loan to Value Ratio (LTV)
The LTV ratio, calculated by dividing the loan amount by the property’s appraised value, indicates the lender’s risk exposure. A higher LTV ratio means greater risk, potentially leading to a higher interest rate, while a lower ratio may result in a more favorable rate.
2. Credit Score
The debtor’s credit score plays a vital role in determining the interest rate. A high credit score demonstrates a history of responsible loan repayment and reduces the perceived risk for the lender, leading to a lower interest rate. Conversely, a low credit score could result in a higher interest rate due to higher perceived risk.
The borrower’s income is essential for assessing loan repayment capability. A stable and sufficient income can lead to a lower interest rate, as it instills confidence in the lender regarding timely repayment. An unstable or insufficient income may prompt lenders to charge a higher interest rate.
4. Type of Property
The nature of the property being financed also impacts the interest rate. Properties considered riskier, such as those located in flood-prone areas or with environmental hazards, may attract higher interest rates from some lenders.
5. Market Conditions
Commercial property loan interest rates are influenced by prevailing market conditions, including inflation, central bank interest rates, and the demand for commercial property loans. Favorable market conditions may lead to lower interest rates, while adverse conditions can result in higher rates.
Steps for Commercial Property Loans Application
To initiate the application process for a commercial property loan, follow these steps:
Step 1: Visit the official website of the lending institution.
Step 2: Locate the section dedicated to ‘Commercial Property Loan.’
Step 3: Click on the ‘Apply Now’ button available on the page.
Step 4: Complete the application form with essential details such as your name, contact information, and employment details.
Step 5: Provide information related to your income and financial status.
Step 6: Submit the completed application form online.
After submission, a representative from the lending agency will reach out to you to further assist in processing and approving your commercial property loan application. They will guide you through the necessary steps and requirements, ensuring a smooth and efficient loan application process.
Tax Breaks of Commercial Property Loans
When obtaining a business loan to acquire a commercial property, you could qualify for a standard deduction of 30% on the taxable income invested in equipment, technology, building materials used for repairs, and property renovations. Availing this deduction can be advantageous as it helps lower your overall tax liability.
In India, commercial property loan rates can vary significantly, influenced by factors like the lender’s terms, loan amount, property location, tenure, and the borrower’s creditworthiness. Before committing to a loan, it is crucial for potential borrowers to conduct thorough research and compare various lenders and loan offerings.
Additionally, borrowers should carefully assess the long-term financial impact of acquiring a commercial property loan and have a well-defined repayment strategy in place. With diligent evaluation and prudent planning, a commercial property loan can serve as a valuable resource for fostering business growth and expansion in India.
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Q1. What is the interest rate on a commercial property loan?
A. Commercial property loan interest rates generally are higher compared to home loans, with rates ranging from 2% to 18%. The interest rate variation is influenced by factors like property type, construction stage, loan type, tenure, and the borrower’s portfolio, among others.
Q2. Do banks give loans to buy commercial property?
A. Yes, banks do give loans to buy commercial property. Below are some of the banks’ commercial property loan interest rates.
|HDFC Commercial Property Loan Interest Rate||9.05% – 11.05%|
|ICICI Commercial Property Loan Interest Rate||9%-10%|
|Axis Bank Commercial Property Loan Interest Rate||8.00% – 10.05%|
|IDBI Commercial Property Loan Interest Rate||10.70%-11.45%|
|DHFL Commercial Property Loan Interest Rate||11.00%-11.50%|
|Kotak Loan for Commercial Property Rate of Interest||8.90% – 9.85%|
Q3. How much loan can I get for commercial property in India?
A. In India, the loan coverage for commercial properties is limited to 55% of the total purchase price. As a result, the buyer must arrange for the remaining 45% of the purchase price through alternative means, as it cannot be financed through a loan.
Q4. Do we get tax benefits on commercial property loan?
A. Yes. When obtaining a business loan to acquire a commercial property, you could qualify for a standard deduction of 30% on the taxable income invested in equipment, technology, building materials used for repairs, and property renovations. Availing this deduction can be advantageous as it helps lower your overall tax liability.