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    List of Commercial Property Loan Rates in India 2024

    • 5 min read
    • Last Modified Date: March 5, 2024
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    • Welcome to our comprehensive “List of Commercial Property Loan Rates in India 2024.” 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.
    • Explore the promising world of commercial real estate structured debt for a lucrative investment option that offers both monthly income potential and high returns. By investing as little as 10 lakhs through trusted alternative investment platforms like Assetmonk, you can tap into this golden opportunity to maximize your profits and create a dependable source of monthly income.

    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 2024

    But what are the current commercial property loan rates/ current commercial  property loan interest rates or commercial property loan rates today? 

    New Year 2024 Creative Design Concept – 3D Rendered Image

    Name of BankTerm of Loan (in years)Processing FeeInterest RateLowest EMIExtra Benefits
    Karnataka Bank51 percent10.50 – 13.20 percentRs. 1349Easy application processHigh loan amounts
    DCB Bank51 percent9.75 – 10.50 percentRs.1059Versatile repayment alternativesHassle-free online application process
    L&T Finance51 percent11.00-15.00 percentRs. 1137Generous loan amountsPersonalized repayment choices
    Yes Bank51 percent9.05-11.05 percentRs. 1017Attractive interest ratesAdaptable repayment alternatives
    Punjab National Bank50.75 percent9.05 – 11.05 percentRs. 1269Expedited processingAttractive interest rates
    Standard Chartered Bank5Rs. 11k8.75 – 11.05 percentRs. 999Substantial loan amountsVersatile repayment choices
    IDFC First51 percent9.00-12.05 percentRs. 1012Personalized repayment choicesFacility of balance transfer 
    Kotak Mahindra Bank50.75 percent8.90 – 9.85 percentRs. 1261Versatile repayment alternativesHassle-free online application process
    Axis Bank5Rs. 5k8.00 – 10.05 percentRs. 956Substantial loan amountsExpedited processing
    HDFC Bank50.75 percent9.05 – 11.05 percentRs. 1269Attractive 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

    ParticularsSelf-EmployedSalaried
    Age25 years-70 years28 years-58 years
    ResidencyShould be a resident and citizen of IndiaShould be a resident and citizen of India
    Status of EmploymentShould have a consistent income sourceEmployed MNC, private or public sector
    ExperienceMust have more than 5 years of experienceMust have more than 3 years of experience
    IncomeThe 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

    DocumentsSelf-Employed Non-ProfessionalSelf-Employed ProfessionalSalaried
    Business’ Proof of Existence for 3 years & Business ProfileYesNoNo
    Certificate of EducationNoYesNo
    CA Certified/ Audited Balance Sheet & Profit & Loss Account For Past 3 years YesYesNo
    IT Returns & Computation of Income for Past 3 yearsYesYesNo
    Approved Plans & Documents of Property title YesYesYes
    Form 16 YesYesYes
    Cheque For Processing Fee YesYesYes
    Salary slips of Past 3 monthsNoNoYes
    Bank statements of Past 6 monthsYesYesYes
    Proof of Age, Residence, and IdentityYesYesYes
    Application form with Signature and photograph YesYesYes

    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.

    3. Income

    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.

    Bottom Line

    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.

    Assetmonk, a unique alternative investment platform in India, offers investors an array of lucrative opportunities, including commercial real estate structured debt and other carefully curated alternative investment avenues. With a minimum investment requirement of 10 lakhs, Assetmonk provides exclusive investment options to its clients.

    By utilizing Assetmonk’s platform, investors stand to benefit from an impressive Internal Rate of Return (IRR) of 18 percent, showcasing the platform’s dedication to delivering substantial returns on investments for its clients.

    Related Articles

    1. How to Get Started in Commercial Real Estate Investing.
    2. Mumbai Commercial Real Estate.

    FAQs

    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 Rate9.05% – 11.05%
    ICICI Commercial Property Loan Interest Rate9%-10%
    Axis Bank Commercial Property Loan Interest Rate8.00% – 10.05%
    IDBI Commercial Property Loan Interest Rate10.70%-11.45%
    DHFL Commercial Property Loan Interest Rate11.00%-11.50%
    Kotak Loan for Commercial Property Rate of Interest8.90% – 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.

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