How to Use Your Home Loan for Purchasing Commercial Property
July 13, 2025

Thinking of venturing into the world of commercial real estate? You're not alone. Many individuals dream of owning a commercial property as it offers lucrative opportunities for businesses and investments. However, purchasing commercial property requires significant financial investment, making it seemingly out of reach for most individuals.
Many customers think a home loan can also be utilised for commercial property purchase. However, that’s not the case. A home loan is designed only for purchase of a residential house or property. So, what’s the alternative? Apply for a commercial property purchase loan – loans designed specifically for commercial property purchase.
What is Commercial Property Purchase Loan?
Also known as Non-Residential Property Loan, Commercial Property Purchase Loans are secured loans designed specifically for self-employed professionals and non-professionals who want to construct, renovate or buy an office space to establish their business. The tenure usually ranges between 3 years and 10 years. For example, Ujjivan SFB offers commercial property loans up to ₹30 lakh at affordable interest rates and flexible repayment tenures up to 7 years.
How Commercial Property Purchase Loan Works
A commercial property purchase loan is similar to home loan. As in it’s a secured loan where the concerned property acts as the collateral. The ownership of the commercial property will be transferred to you once you repay the loan amount.
These loans can only be utilised for purchasing or renovating a commercial/non-residential property. The interest rate could be slightly higher compared to regular home loans.
Making Financial Calculations
When it comes to utilising home loan for purchasing commercial property, it's crucial to have a clear understanding of your financial calculations.
Let's break down some key calculations that will help you make informed decisions:
EMI Calculation
Before availing a loan, it's essential to calculate your EMI. Your EMI is the fixed monthly payment you need to make towards repaying your loan. An online home loan EMI calculator can simplify this process by providing quick and accurate results. Input the loan amount, interest rate, and tenure to determine your monthly installment.
Loan Eligibility Calculation
To understand how much loan you are eligible for, financial institutions consider various factors such as your income, credit score, existing obligations, and the value of your collateral. Use an online loan eligibility calculator to get an estimate of the loan amount you may be eligible for based on these factors.
Return on Investment Calculation
Once you purchase a commercial property, it's important to analyse its potential returns on investment. Calculate metrics such as rental yield, capitalisation rate, and cash-on-cash return to assess the profitability of your investment.
Commercial Property Loan Tax Benefit
Commercial property owners who have taken a loan to renovate or refurbish the property can avail tax benefits up to ₹2 lakh on the interest paid towards the loan under Section 24(b) of the Income Tax Act.
Documents Required for Commercial Property Loans
Here’s a generic representation of the documents you may need to avail a commercial property purchase loan. In case you want to avail the loan from Ujjivan, please consider contacting the bank for further information. We’ll be more than happy to assist you in your commercial property purchase journey.
- Identity Proof: Aadhaar card, PAN, Voter ID card, driving licence, passport, etc.
- Income Proof: Last 3 years’ IT Returns or last 3 years’ financial statements
- Proof of business existence
- Last 6 months’ bank statements
- Processing fee cheque
- Title deeds of property
- Proof of number of encumbrances on the property
- Application form with a duly signed photograph
Disclaimer: The above information is a generic representation of the documents you might need. For accurate and elaborate details, please contact the bank.
Final Thoughts
In conclusion, using your home loan for purchasing commercial property opens up new avenues for investment and expansion. However, kindly check your loan eligibility and keep your documents in handy before applying to enjoy a seamless loan application process.
Buying a house has never been this easy! Avail Ujjivan SFB’s wide range of affordable home loan products and enjoy a hassle-free loan journey. From house purchase loan to plot loans and home improvement loans, we have it all! Alternatively, you can browse through Ujjivan SFB product suite - our wide range of financial products are designed to make your financial life better.
Disclaimer:
The contents herein are only for informational purposes and generic in nature. The content does not amount to an offer, invitation or solicitation of any kind to buy or sell, and are not intended to create any legal rights or obligations. This information is subject to updation, completion, amendment and verification without notice. The contents herein are also subject to other product-specific terms and conditions, as well as any applicable third-party terms and conditions, for which Ujjivan Small Finance Bank assumes no responsibility or liability.
Nothing contained herein is intended to constitute financial, investment, legal, tax, or any other professional advice or opinion. Please obtain professional advice before making investment or any other decisions. Any investment decisions that may be made by the you shall be at your own sole discretion, independent analysis and evaluation of the risks involved. The use of any information set out in this document is entirely at the user’s own risk. Ujjivan Small Finance Bank Limited makes no representation or warranty, express or implied, as to the accuracy and completeness for any information herein. The Bank disclaims any and all liability for any loss or damage (direct, indirect, consequential, or otherwise) incurred by you due to use of or due to investment, product application decisions made by you on the basis of the contents herein. While the information is prepared in good faith from sources deemed reliable (including public sources), the Bank disclaims any liability with respect to accuracy of information or any error or omission or any loss or damage incurred by anyone in reliance on the contents herein, in any manner whatsoever.
To know more about Ujjivan Small Finance Bank Products Visit:"https://www.ujjivansfb.in"
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to Ujjivan Small Finance Bank Limited or its licensors. Unauthorised use or misuse of any intellectual property, or other content displayed herein is strictly prohibited and the same is not intended for distribution to, or use by, any person in any jurisdiction where such distribution or use would (by reason of that person’s nationality, residence or otherwise) be contrary to law or registration or would subject Ujjivan Small Finance Bank Limited or its affiliates to any licensing or registration requirements.
FAQs
1. Can I use my existing home loan for purchasing any type of commercial property?
No. Home loans are designed for purchase of residential property only. You need to apply for a commercial property purchase loan to buy an office space or any other commercial property.
2. Can I get a business loan if I already have a home loan?
Yes, having a home loan does not disqualify you from obtaining a business loan. Lenders consider various factors, including your income and credit history, when assessing your eligibility.
3. How can I determine the interest rate on my home loan for commercial property?
The interest rate depends on factors such as the lender's policies, market conditions, and your creditworthiness. Please check with your bank to know in detail.
4. Can I use funds from my home loan for renovating a commercial property?
Commercial property loans can also be used for renovating commercial property. However, it's crucial to confirm this with your bank before proceeding.
5. What is the maximum loan amount I can obtain for purchasing commercial property using my home loan?
Ujjivan SFB offers a maximum of ₹30 lakh for commercial property purchase. The repayment tenure is up to 84 months or 7 years.
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