Commercial Property Loan: What You Need to Know Before You Buy

When you're buying a commercial property loan, a type of financing specifically designed for businesses to purchase office buildings, retail spaces, warehouses, or other income-generating real estate. Also known as a commercial mortgage, it’s not like a home loan—terms are tighter, down payments are higher, and lenders care more about cash flow than your credit score. If you’re thinking about buying a shop, office, or industrial unit in Mulund, this isn’t just about finding the right space. It’s about making sure the numbers work before you commit.

Most banks and non-bank lenders require at least a 25% to 35% down payment for a commercial property loan, a financial product used to fund the purchase of income-producing real estate. That’s way more than the 10-20% you’d need for a home. Why? Because lenders see commercial properties as riskier. They don’t just look at your salary—they look at the building’s rental income, vacancy rates, and tenant quality. A single long-term tenant signing a 5-year lease can make or break your approval. If the property already has reliable tenants paying rent, your chances go up fast.

Interest rates on these loans are usually higher than residential mortgages, often floating based on market benchmarks like LIBOR or the prime rate. Loan terms are shorter too—typically 5 to 10 years, with a balloon payment due at the end. That means you’re not fully paying off the loan over time. You’ll need a plan for refinancing or selling before the balloon hits. Some lenders offer 20- or 25-year amortization schedules to keep monthly payments low, but the full balance still comes due in 10 years. You can’t just assume you’ll have the cash ready. You need a backup strategy.

Not everyone qualifies. Lenders check your business financials, personal credit history, and sometimes even your industry experience. If you’re new to real estate investing, they’ll want proof you can manage a property—like a solid business plan or a property manager on standby. If you’ve owned rental property before, that helps. If you’re buying for your own business—say, a clinic or a store—you’ll need to show consistent revenue. A startup with no track record? Tougher. But not impossible. Some lenders specialize in first-time commercial buyers if the asset is strong.

And don’t forget the hidden costs. Appraisals, legal fees, environmental assessments, and title insurance can add 2-5% to your upfront expenses. Some lenders require reserve accounts—money set aside for repairs or vacancies. These aren’t optional extras. They’re part of the deal. Skip them, and you might get denied.

There’s no one-size-fits-all loan. A retail space in Mulund with foot traffic will get better terms than a warehouse on the edge of town. The location, condition, and tenant profile matter more than you think. That’s why you’ll find posts below showing real cases—what worked, what didn’t, and how people got approved even when they thought they didn’t qualify. You’ll see how others calculated cash-on-cash returns, handled balloon payments, and picked lenders who actually understood their business. This isn’t theory. It’s what people in Mumbai are doing right now to buy commercial space without getting buried in debt.