Difference between loans for residential property purchase and commercial shop purchase
There are quite a lot of differences between loans for residential property purchase and loans for commercial property purchase in India. Listed below are the major differences between the two.
- LTV ratio-?LTV ratio or loan-to-value ratio describes the ratio of the loan to the value of the property purchased. While for residential properties, the LTV ratio is around 75-85%, for commercial properties, the ratio is much lesser at 55%.
- Rate of interest-?The rate of interest is higher for commercial property loans when compared to residential property loans.
- Loan tenure-?The maximum loan tenure for commercial properties is usually restricted to 10 years while the loan tenure offered for residential properties can go up to 25-30 years.
- Processing fee-?The processing fee charged for commercial property loans is much higher when compared to the processing fee for residential property loans. The usual processing fee for residential property loans is capped at Rs.10,000 while the standard processing fee for commercial loans is 1% of the loan amount.
Loans for purchase of Commercial Shops/Properties in India
Listed below are some the popular loans that offers finance for purchase of commercial shops/properties in India:
Indian Bank My Own Shop loan
If you want to purchase a shop or commercial space of your own to give wings to your business, the Indian Bank My Own Shop Loan is the ideal option for you. Some of the notable features of this loan are:
· If you are an individual, professional, or self-employed individual under the age of 50 years, you can apply for this loan.
· This loan is also available for public/private limited companies, propriety firms, and registered partnership firms that have been in the business for not less than 3 years.
· You can take this loan to renovate, purchase, or construct a commercial space for your business.
· This loan will offer you funding up to a maximum amount of Rs.50 lakh.
· This loan comes with a 25% margin which is the promoter’s contribution.
· The loan can be repaid in a maximum term of 120 months.
· The security to be given for this loan is personal guarantee of the directors/partners, or equitable mortgage on the commercial space to be purchased.
ICICI Bank Office Premises loan
The Office Premises loan offered by ICICI Bank can be availed if you are looking to own an office space for your business. This loan can be taken to not only renovate or purchase an existing office property but also to construct one as per your requirements.
PNB Housing Commercial Property loan
Punjab National Bank (PNB) offers a specialized commercial property loan which you can take to construct or purchase commercial property. The notable features of this loan are as follows:
· You can avail this loan if you are a salaried or non-salaried professional or non-professional under the age of 50 years.
· Partnership firms and corporate bodies which have been running successfully for not less than 3 years, are also eligible to apply for this loan.
· The floating rate of interest applicable on this loan ranges from 10.25% to 11.10%.
· The maximum amount that can be obtained under this loan scheme is limited to 70% of the property purchase price.
· The collateral/security applicable for this loan would be the property being purchased using the loan or any other security that the bank considers fit. The bank may require you to provide an additional or interim security as well.
· Under this loan, you, the borrower, will be expected to contribute a minimum of 30% of the property cost, including registration charges and stamp duty.