- Directly Pay EMI from Your Property’s Lease Income.
- Starting Interest Rate: 8.0%.
- Loan for Purchasing Pre-Leased Property or Against an Existing Property
- Extended Loan Tenure for Higher Eligibility.
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Lease Rental Discounting (LRD) Loan: Truely Care-Free
Lease Rental Discounting (LRD) is a loan where property owners use the rental income from their property to repay the loan. Here are some unique selling points (USPs) of Lease Rental Discounting.
- Diverse Property Types: LRD is available on a wide range of property types, including commercial, industrial, and residential.
- Lower Interest Rates: LRD offers attractive interest rates starting as low as 8.0% through leading banks.
- Higher Loan Limits: You can secure substantial loan amounts exceeding 100 Crores.
- Extended Loan Tenure: With longer than lease tenures, LRD offers enhanced eligibility.
- Varied Collateral Options: LRD loans allow you to use the leased property itself as collateral or choose alternative collateral if you already have an existing loan on the leased property.
- Rent Escrow Flexibility: Some lenders don’t require a rent escrow account, giving you more control over your cash flow.
Choose Joy Loan and gain access to the lowest rates from our 50+ partner banks and NBFCs. Rely on our 12+ years of experience for quicker loan approvals and disbursements.
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FAQ Lease Rental Discounting (LRD) Loan
Lease Rental Discounting or LRD loan is a term loan provided based on the rental income generated by the borrower's property. You can use either the leased property or another property as collateral.
Having too many existing loans can affect your chances of getting approved for any loan. However, Lease Rental Discounting (LRD) differs from Loan Against Property (LAP) in this aspect.
Loan Against Property depends on your credit history, income, and existing debts. So, if your EMI liability is higher in comparison with your financial eligibility, banks might decline your application.
However, Lease Rental Discounting is mainly based on the rental income from the property and its value. Your existing debts matter less because the bank directly receives rent payments, ensuring EMI payment.
Yes, some banks provide LRD as an overdraft (OD) facility.
LRD is available for residential, commercial, and industrial properties that generate stable rental income. When applying, ensure there are at least 2 years left on the existing lease agreement.
LRD loan funds can be used for business expansion, buying new property, loan consolidation, and various personal needs.
To qualify for a lease rental discounting loan, ensure these:
- Your property generates enough rental income to support a minimum loan amount of 20 Lakhs.
- Have reliable tenants who can meet their rental obligations.
- Your property must meet all legal requirements and should not be involved in any legal issues.
- Make sure you have a valid lease agreement with a trustworthy tenant.
- Your rental income should be stable and easily verified.
- There should be at least 2 years left on the lease term.
- Having an additional source of income can strengthen your loan application
- Maintain a good CIBIL score for better loan approval odds.
• Individuals in a personal capacity: Salaried individuals, self-employed professionals, and NRI/PIO/OCI/Merchant Navy personnel.
• Non-individual entities: Proprietorship firms, partnership firms, private limited companies, public limited companies, HUFs, trusts, and societies.
The maximum loan amount depends on the rent you receive. It can go well beyond 100 crores from a single lender.
Your eligibility is primarily based on the rental income from the property. Banks usually consider 70% to 90% of the net rental income for calculating EMIs, depending on the lessee's credibility. If you have a strong financial standing, they might consider the full 100%.
Besides, your repayment capacity can also influence the loan amount. Typically, the loan amount can be 60% to 80% of the net present value of the future rentals you'll receive during the loan tenure.
LRD loans often feature impressively low interest rates, particularly when leased to big corporates, blue-chip companies, or banks. The tenant's solid reputation and financial stability assure banks of timely payments.
So, if you have a corporate tenant and a strong financial history, you may access LRD loans at rates below market standards. For a personalized quote, please reach out to us.
The typical LTV is 70%, but in a favorable lending environment, it can reach up to 100%.
Lease rental discounting loan tenures typically range from 5 to 15 years. However, some lenders may extend the tenure to 20 years based on the sustainability of property rentals and other factors.
For individual borrowers, the borrower's age is also a factor. For salaried individuals, the loan maturity age is typically set at 60 years, while for self-employed customers, it can go up to a maximum of 70 years.
Non-individuals do not such have age restrictions.
Besides borrowers' documents depending on profile, the bank needs the following extra items:
• Lease agreement.
• Bank statements from the past six months that show rental income.
Sometimes, the bank might demand a Tripartite Agreement involving the bank, borrower, and tenant. With this agreement, the tenant agrees to make rental payments directly to an escrow account designated by the bank.
Yes, you can make partial payments after 6 to 12 months. Banks typically allow up to 25% of the loan amount to be paid as partial payments without charges.
Yes, you have the option to foreclose the loan after 6 to 12 months. Foreclosure charges apply as per the loan agreement.
Lease rental discounting is available through major banks like Axis Bank, HDFC Bank, ICICI Bank, and many others.
At Joy Loan, we boast over a decade of local market expertise, ensuring we can secure the best deal based on your profile. Contact us now to discover the most suitable lender for your needs.
You can claim a deduction for the interest paid on LRD loans from the rental income generated by the property, leading to tax savings.
If the tenant defaults on rent payments, the responsibility falls on the borrower.
Therefore, it's crucial for you to monitor the tenant's financial stability and ensure the property doesn't remain vacant. Additionally, it's important to be proactive in renegotiating lease terms or finding a new tenant as the lease period nears ending.
If the tenant has a bad credit history, it can be difficult for the borrower to get a loan from the bank. But if the tenant has an excellent reputation, minor credit problems with the borrower can be worked out with the bank.
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