What you need to know
A commercial property purchase loan finances a shop, office or other commercial premises. It is not a housing loan: RBI’s 90/80/75% LTV slabs for housing do not apply, lenders set lower LTVs and shorter tenures, rates are higher, and the home-loan tax deductions under Sec 80C and the ₹2 lakh self-occupied cap do not apply.
Commercial vs home loan
| Point | Commercial property loan | Home loan |
|---|---|---|
| Rate | Higher; priced by lender risk policy | Repo-linked, lowest retail rates |
| LTV | Lender-specific, usually lower | 90% / 80% / 75% RBI caps |
| Tenure | Shorter | Up to 30 years |
| Income assessed | Business cash flow and/or expected rent | Salary or business income |
| Tax | Interest deductible as business expense (own use) or against rent (let out); no 80C | 80C principal + 24(b) interest (old regime) |
| GST on under-construction | Applies at commercial rates | 5% / 1% for residential |
Prepayment
- Floating-rate loans to individuals for non-business purposes carry no prepayment charge.
- For loans sanctioned from 1 Jan 2026, most commercial banks and large NBFCs also cannot charge prepayment on floating-rate business loans to individuals and micro/small enterprises (RBI 2025 Directions). Check your KFS.
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Frequently asked questions
Can I use a home loan to buy a shop?
No. Home loans are only for residential property; a mixed-use building is assessed case by case.
Is rent from the shop enough to get the loan?
Lenders may count expected rent with a haircut, but usually also want your own income.
For information and comparison only. Loan terms, rates and rules change — confirm with the lender and read the Key Facts Statement before borrowing.