A loan obtained by mortgaging a commercial property is an excellent method for securing funds to meet business needs. The funds from such a loan can be used for both business and personal purposes. Eligible commercial properties include shops, offices, and industrial premises.
When a loan is secured using a commercial property, particularly one that is self-occupied, lenders typically offer favorable terms. The property to be mortgaged must be in the name of the applicant or co-applicants and must comply with legal requirements.
Additionally, the property should be free of any unauthorized structural modifications and should be marketable. It must also be located in areas approved by lenders, in accordance with their lending criteria.
Both businesses and individuals can apply for these loans, with a maximum tenure of up to 15 years, depending on the borrower’s age at the time of entry or the remaining age of the property, as well as the specific lending criteria of the respective lenders. The market value of the property used as collateral is typically determined by valuers approved by the lenders.
For income eligibility calculations, both the borrower entity and co-applicants can be combined. The selection of eligible co-applicants varies among lenders, but generally includes blood relatives and spouses. SBI, along with other banks and NBFCs, offers loans against residential properties, subject to the conditions mentioned above and their own lending or credit norms.