How to Take a Loan Against Commercial Property?

A loan against commercial property allows a borrower to get a decent amount of money by keeping the property as a mortgage. From maintaining the cash flow of funds in the business to paying their kids higher studies or covering medical expenses, a borrower can use this loan for anything. Most lenders approve a loan against property easily. Therefore, this loan can be used for urgent monetary needs.

Steps to apply for a loan against property

Here is a step-by-step guide on how to apply for a loan against property:

Step 1- Research thoroughly the loan lender. Visit their official websites.

Step 2- Some lenders’ website offers a loan against property EMI calculator section. Calculate the EMI.

Step 3- Go to the loan against property section. Click ‘How to apply’.

Step 4- Fill up the basic details with the required information, such as property and personal details.

Step 5- Submit the application form.

After successfully submitting the application form, a representative from the respective lender will help the loan applicant with further procedures. These include verification of the documents, checking the eligibility criteria and getting the loan money.

Features and benefits

  • High loan amount: Most loan lenders offer loans of up to Rs.5 crore against commercial property.
  • Easy approval: An LAP gets approved quickly if the property does not have any disputes or problems.
  • No end-use restriction: From funding a child’s education to paying medical expenses or growing a business, a LAP can be used for anything.
  • Comfortable repayment: In the case of a LAP, one can choose a tenor of 15 years or more.
  • No additional charges: Loan borrowers do not need to pay any additional charges on foreclosures or prepayment

Eligibility criteria for loan against commercial property

Getting a loan against commercial property in India is a relatively easy task. However, while applying, knowing the eligibility criteria is a must. The eligibility criteria may vary from lender to lender. 

Here are some general parameters:

  • The borrower needs to be an Indian national.
  • Borrower needs to have a steady source of income.
  • Borrower must have a commercial property which is free of any legal disputes.
  • Age limit for a salaried individual who has worked for at least 2 years, is generally 21-65 years.
  • Age limit for an individual who has been self-employed for 3 years, is generally 24-65 years.
  • Loan borrower must have a good CIBIL score.

Documents required for loan against property

Following is the list of documents required for a loan against commercial property.

Identity and address proof

  • Aadhaar card
  • Pan card
  • Voter id card
  • Driving license
  • Passport

Proof of employment

For salaried individuals

  • Identity card issued by the employer
  • Latest salary slip
  • Bank statement for the last 3 months
  • Income tax return documents

For self-employed individuals

  • VAT/CST certificate
  • GST registration details
  • Bank statement for the last 6 months
  • Income tax return details
  • Profit and loss statement

Property documents

  • Copy for documents of the property to be mortgaged
  • Title deed
  • Buyer’s agreement
  • Receipt payment of the latest taxes

Other documents

  • Details of all running loans
  • Passport-sized photographs signed across

The above-mentioned list is indicative. Lenders may ask for additional documents as and when needed.

After fulfilling the eligibility criteria and accumulating all the required documents, an individual can apply for a loan against property.

Besides, many financial institutions extend pre-approved offers on financial products, such as LAP, home loan, etc. These offers streamline and simplify loan against property application process. Existing customers can check their pre-approved offers by providing their name and contact details.

Taking a loan against a commercial property needs careful planning. Besides, knowing the essential details of it, such as the eligibility criteria, required documents, how to apply, etc., is highly crucial to avail the loan easily. 

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