5 Benefits Of Taking A Loan Against Your Commercial Property

Dec 22, 2022

5 min. Read

5 Benefits Of Taking A Loan Against Your Commercial PropertyHome Loan

Amongst the many loan options available in India, non residential property loan is one of the easiest forms of loan to arrange for some last minute cash. Although the process is a fairly detailed and long, the loan itself is a simpler form of instrument and comes with benefits as well. Here are top 5 benefits of a non residential property loan.

What is a non residential property loan?

A non residential property loan is a loan that is taken on an existing commercial property. The property is mortgaged for the loan during the tenure of the loan. The detailed loan process is outlined here along with its benefits.

Eligibility for Non Residential Property LoanEligibility for Non Residential Property Loan

To be able to apply for a Non residential property loan, one must meet the following eligibilities

•    You must be an Indian citizen
•    You must not be more than 50 years of age
•    For salaried individuals, minimum 3 years of job stability is required
•    For self employed individuals & professionals, the business or profession must be operational for a minimum of 3 years

Non Residential Property Loan Calculator

Like every other lending instrument, non residential property loan eligibility can be checked by simply visiting any financial institution’s website and searching for the non residential property loan calculator or commercial property loan calculator. You would need to enter the following details in the calculator to get your eligibility, breakup of EMIs, loan tenure and interest rates offered by the concerned bank or financial institution.

Documents required for Non Residential Property Loan

For non residential property loans, a long list of documents is necessary. We have divided them into categories for salaried and non-salaried individuals:

Common documents

•    Proof of residence
•    Proof of Identity
•    Proof of Age
•    Copy of title documents of the property

For Salaried individuals

•    Form 16 for last 2 years
•    Salary slips for last 3 months

For Salaried individuals

•    Proof of business operations for last 3 years
•    Income tax statement for last 3 years
•    P&L statement, duly signed by the CA

Factors to consider before taking out a commercial property loan

Applying for a non-resident property loan can be daunting. From determining your eligibility to gathering all of your documents, the tasks may appear never-ending. Here are a few things to remember when applying for the loan:

• Do detailed research of all the lenders and their offerings. As huge a task as it may seem, but you can save a lot of money and efforts just by understanding what each institution and ban has to offer.
• Do a valuation check of your property. Check what your property is worth in the current market and what does the future valuation looks like.
• Be thoughtful of your income against the EMIs. You can check the EMI amounts by using the non residential property loan calculator and evaluate the tenure based on the monthly EMIs you can pay comfortably.
• Ensure all documents are in place and wherever required, are timely updated. Your loan disbursement largely depends on timely submission of all your updated documents.
• Decide the minimum and maximum loan amount you need to take. This will help you in the long run. Loans are easier to take these days, but harder to repay. As enticing as getting a loan easily may seem, always keep in mind that repayments are planned for an uncertain future.
• Have an emergency fund. This can help you in case you fail to honour monthly EMIs. As a rule of thumb, keep a 6 months EMI worth of amount as an emergency fund and an additional 3 months income worth of funds to address any other exigency.

A non residential property loan is a secured loan that allows you to borrow a large sum of money to meet medium to long-term personal or business needs. All that is required to obtain such a loan from reputable lenders is possession of a personal or commercial property that is free of any liabilities. A non residential property loan is considered an ideal loan for property owners because it offers large loan amounts that can meet a variety of financial needs, at lower interest rates and the property still remains theirs. Please ensure that you take non residential property loan from a trustworthy lender, who provides the benefits and features you require with their loan products. Based on your eligibility, banks may offer loans of up to Rs. 12 crores with flexible repayment terms of up to 60 months.

5 Benefits Of Taking A Loan Against Your Commercial Property

A non residential property loan comes with its own advantages and benefits. Here are 5 benefits and reasons why you should consider taking a non residential property loan -

1 Longer tenure of repayment
A non residential property loan lets you choose a repayment schedule of 15 to 20 years. With these elongated repayment schedules, you get affordable EMIs and a streamlined repayment schedule.

2 Quick approval of loan
The process of getting approvals for loans is relatively easier as compared to other unsecured loans. The mortgage on the property ensures security to the lenders, hence the quick approval process.

3 Non residential property loan Tax benefits
If you are using the loan amount for business purposes, you are eligible for certain non residential property loan tax benefits on the interest and processing fees. You may also get a tax deduction if you buy a residential property with the loan amount.

4 Maintenance of Property
Although the property serves as a mortgage with the bank, you still get to use it for non residential purposes or business purposes. This also helps to maintain the property continuously.

5 Lower interest rate
Non residential property loan interest rates are relatively lower compared to other lending products. Since the banks have the legal right to the property during the loan tenure and the risk factor is low, non residential property loan interest rates are kept lower.

This article is authored by L&T Finance.

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