Commercial Property Loan Interest Rates

Reliance CF By Reliance CF, 5th Dec 2016 | Follow this author | RSS Feed
Posted in Wikinut>Guides>Property & Real Estate>Mortgages & Finance

Applying for a residential loan is easy but the process of applying for a commercial loan can be a bit tricky. This is because, lenders usually resort to a high level of scrutiny, which can be qualified only of one is aware of the needful.

Difference between residential and Commercial Property Loan in India

In order to set up his business, one would definitely need an office space. People generally take office spaces on rent because they often fail to get a easy commercial loan. This is because they follow a wrong approach of application for the loan as they consider a commercial property loan similar to a home loan. Here is a brief on the differences between a residential and commercial loan.

What is the difference between commercial property loan and residential property loan?

Getting a loan on the residential property is a cake walk as lenders are happy to sanction loans for such properties. However, the scenario is a bit different when it comes to applying for a commercial loan because the lender is often in doubt and therefore has a high level of scrutiny for such projects. Few of the major differences in a commercial and residential property loan are listed as follows.

1. Loan to Value Ratio

Loan to Value refers to the amount that would be funded by the lender. This ratio reflects the value of the property, which is mortgaged and the amount that is owned by you. In the case of commercial property, this value is very low as compared to residential property. A lender usually funds 80 to 90% of the cost of the residential property while the value is often limited to 60% in most case of commercial property.

2.Rate of interest

The rate of interest is one of the major decisive factors of the EMIs of the loan. The higher rates conclude high amount of interest, which is to be paid by you. The commercial property loan interest rates are at least 2 to 3 % higher than the residential property rates. This may also steep up to 4 to 5 % if the documents are not strong enough to apply for the loan.

3.Higher processing Fee

The processing fee for home loans by most lenders is fixed up to a certain loan amount and beyond that amount; it then varies from 0.5 to 1% of the total loan value. However, in the case of a commercial loan, the fee varies from 0.5 to 1.50 % of the total loan value plus taxes.

4.Technical Evaluation

A high level of scrutiny of the technical specification of the commercial property is maintained. However, the laws and scrutiny are easier on a residential loan.

5.Loan tenure

There is a drastic difference in the timeline for which the home loan and commercial loan is lent. While the tenure of a commercial loan generally is about 10 to 15 years, a residential loan applicant can easily pay back the loan amount within a relaxed tenure of maximum 30 years in most cases.

Who can apply for the loan?

A commercial property loan can be applied by anyone aged from 21 years to 60 or 65 years, where 60 is the age limit for the salaried personal and 65 is the limit for the self-employed and self-employed non-professional in most cases. Anyone from the above mentioned can apply for a loan on ready & resale Properties, under construction properties of pre-approved builders. So, if you keep these things in mind, one can easily avail a loan from a lender.

For Reference - Reliance Commercial Finance


Commercial, Commercial Property, Commercial Property Loan, Commercial Property Loan Interest Rates

Meet the author

author avatar Reliance CF
Reliance Commercial Finance is a member of the Reliance Capital family with an operational presence over 80 locations in India.

Share this page

moderator Peter B. Giblett moderated this page.
If you have any complaints about this content, please let us know


author avatar Lady Aiyanna
6th Dec 2016 (#)

Banks are quite notorious. They smile when they have to get you in and kill you if you are passed their use by date. They have no respect for family or even lives of people. They hack, kill, tell lies and even arrange for goons to get their money. Breaking homes for their profitability, businesses folding etc. are all part of this.
Honestly, I would earn my money than take a freaking loan from a bank as they are murderers with a happy face fooling society. Commonwealth Bank and its branches are the biggest crooks. Hacked my account to prevent a court case, destroyed my marriage and home and even made it a point to indirectly humiliate me because I am with a foreign accent and sent me 5 bills with different amounts and even paid the Ombudsman off to rule in their favour.
They hacked my account to prevent this information from being sent to the press.

Reply to this comment

Add a comment
Can't login?