Lease Rental Discounting Meaning
Lease Rental Discounting i.e. LRD is a term loan offered to the eligible borrowers against the collateral of their let out commercial, industrial and residential buildings, which earns a fixed rental income per month. The property must be leased out to a reputed company (as defined under the Companies Act, 1956)/establishments, institutions, public sector units, established commercial organizations, banks, MNCs, Corporates, State & Central Government offices, Municipal Corporations, etc.
- The LRD loans can be used for both personal & business purposes.
- LRD loans are available against the pledge of commercial, industrial and let-out residential premises and buildings.
- LRD loans can also be availed in the form of overdraft loans.
- Longer repayment tenures are available for up to 15 years.
- Maximum LTV up to 70% of the market value of the property.
- Lower LRD interest rates starting from 8.35% p.a. onwards.
- An NRI can also apply for a loan against leasehold property in India.
- Fixed as well as floating interest rates are available.
- Balance transfers of LRD loans are available with top-up loans at attractive interest rates.
LRD Loan Eligibility
|Eligible Profiles||* Salaried, self-employed, and professional Indian residents & |
* Non-Resident Indians.
* All MSME units – Firms & companies (Public or Private Limited Companies, Partnership Firms, or Proprietorship firms).
|Property Mortgage||* Commercial property (shops & offices) |
* Industrial property (warehouse, factory, workshop, etc.)
* Residential buildings (flats/houses) leased out to the staff/employees of reputed & established commercial organizations, banks, and MNCs.
|Minimum Age||Applicants (individuals) must be at least 21 years old.|
|Type Of Loan||* EMI-based term loan. |
* Overdraft loans.
|LRD Loans Interest Rates||Range from 8.35% p.a. – 13% p.a.|
|Minimum Loan Amount For Loan Against Rent Receivables||Rs.10 Lakhs|
|Maximum Loan Amount Under Loan Against Rent Receivables||Rs. 500 Crores.|
|Maximum Tenure For LRD Loans||Up to 15 years.|
|Minimum Lease Period||1 year.|
|CIBIL Score||Satisfactory CIBIL score above 750.|
|Processing Fees On Loan Against Lease Property||Up to 4% of the loan amount plus applicable GST.|
|Renewal Charges||Up to 2% plus applicable GST.|
|Prepayment Charges||Up to 4% of the outstanding loan amount plus applicable GST.|
|Part Payment Charges||Up to 4% in excess of the percentage limit set by the banks in a financial year.|
|Lease Rental Discounting Formula|| Lower of the two: |
1.) Up to 85% of the net present value of the future rentals
2.) Up to 70% of the market value of the property.
Note: The LRD rates and charges are subject to change without prior notice.
Also, read the list of charges in availing of a loan.
Prerequisites To Apply For An LRD Loan
- The property must have been let out and earn a regular rental income per month.
- The property must be let out to a reputed company, institutions, public sector units, established commercial organizations, banks, MNCs, State & Central Government offices, Municipal Corporations, etc.
- The property has a clear and marketable title and is built according to the approved plans of the local government authorities.
- The leased-out property has a valid and registered agreement between the tenants and owners.
- The owners and the tenants are creditworthy as per the banking standards.
Read more on LAP loan eligibility.
Also, read Best Banks For Mortgage Loan In India.
Documents Required For Lease Rental Discounting
|KYC||* Pan Card|
* Adhar Card
|For Salaried||* 4 months salary slips.|
* 2 years form 16
* 6 months bank account statement.
|For Self-Employed||* 2 years ITR with Computation of Income, Saral Copy, Balance Sheet, P&L Account, Capital Account – CA certified with membership no. and UDIN No.|
* 12 months bank account statement.
* Business profile.
* Business proofs.
|Property Papers||* Prior Chain of Agreement.|
* OC/CC + approved plans.
* Index 2.
* Share Certificate.
* Society Registration Copy.Property tax.
* Property maintenance bill.
|Other Documents||* Registered valid lease agreement.|
* Bank account statements for the rent received.
* Duly signed bank application form.
* Processing fee cheque.
* Any other document as required by the bank.
|Additional Documents Required For Lease Rental Discounting Loan Transfer||* LOD (list of documents).|
* Outstanding letter.12 months repayment track record.
- ESCROW account opening is mandatory for loan against rental income.
- The loan against rent receivables interest rate varies depending on the type of property, loan amount, rental income, lessee profile, etc.
- There is a minimum lock-in period for the foreclosure of LRD loans. The lock-in period varies from bank to bank. The maximum lock-in period is for 24 months from the date of final disbursement.
- The part payment charges will vary between the banks depending on the minimum percentage limit set for part payment in a financial year.
- Unlike other loans, an earning co-applicant added to the loan does not increase your loan eligibility.
Banks Offering LRD Loans Services In India
Given below are some of the popular LRD loans provided by the banks
- Lease Rental Discounting ICICI Bank.
- Lease Rental Discounting HDFC.
- Lease Rental Discounting SBI.
- Lease Rental Discounting Bank Of Baroda.
- Lease Rental Discounting Kotak Mahindra Bank.
- Lease Rental Discounting Axis Bank.
- Lease Rental Discounting Bajaj Finserv.
- Lease Rental Discounting Yes Bank.
- Lease Rental Discounting PNB Housing Finance.
LRD Loan Comparison Of The Leading Banks
|Bank Name||Interest Rate||Tenure||Maximum Loan Amount||Maximum Funding Against Rent Receivables||Processing Fees|
|ICICI Bank||8.35% p.a. – 9.50% p.a.||15 years||Rs.3 Crore||85%||Up to 2% of the loan amount + applicable GST.|
|HDFC Bank||9.70% p.a. – 10.30% p.a.||9 years||Rs.5 Crores||85%||Up to 1% of the loan amount + applicable GST. (Min. Rs.3,500/-)|
|SBI||9.45% p.a. – 11 % p.a.||10 years||Rs.500 Crores||95%||Up to 2.02% of the loan amount + applicable GST. (Max. Rs.1,01,865/-)|
|Axis Bank||10.50% p.a. -11 % p.a.||9 years||Rs.5 Crores||85%||Up to 1% of the loan amount or Rs.10,000/- whichever is higher + applicable GST.|
|Bank Of Baroda||8.65% p.a. – 11% p.a.||10 years||Rs.20 Crores||55%||0.50% of the loan amount + applicable GST. (Min. Rs.1000/- & max. Rs.10 Lakhs)|
|Kotak Mahindra Bank||9.50% p.a. onwards||10 years||Rs.5 Crores||Up to 8 times of the net monthly rental received||Up to 1% of the loan amount + applicable GST.|
Note: The LRD information in the table is subject to change without prior notice.
Q. What properties are considered for LRD loans?
Ans: Commercial properties such as shops & offices, industrial properties such as warehouses, factories, workshops, industries, etc., specialized properties, such as schools, hotels, hospitals, banquet properties, marriage gardens, etc., & residential buildings (flats/houses) leased out to the staff/employees of reputed & established commercial organizations, banks, State & Central Government offices/Municipal Corporations, and MNCs.
Q. What is the minimum net rental requirement as per loan against rental receivables policy?
Ans: The minimum net rental income required is Rs.20,000/- per month.
Q. Can I apply for a loan against property on rental income without income proof?
Ans: No, LRD loans cannot be applied without income documents. Refer to the table above to know the LRD documents required.
To download the complete documents for LRD loans till disbursement kindly refers to the links. Documents for salaried, balance transfers for salaried, NRI, proprietorship firm, partnership firm, private limited company,
Q. What is the interest rate for a loan against rental income SBI?
Ans: Interest rates for loan against rent receivables SBI range from 9.45% p.a. – 11% p.a.
Also, read SBI Mortgage Loan.
Q. What is the maximum loan tenure for LRD loan ICICI Bank?
Ans: The maximum tenure for lease rental discounting in ICICI Bank is up to 15 years for commercial properties and up to 10 years for specialized properties such as warehouses, industries, schools, hotels, hospitals, banquet properties, marriage gardens, etc. subject to the remaining lease period of the property.
Also, read ICICI Bank Loan Against Property (LAP). &
Q. What is the maximum and minimum loan amount under loan against rent receivables HDFC Bank?
Ans: The minimum loan amount under loan against rent receivables in HDFC Bank is Rs.10 Lakhs and the maximum loan amount under loan against rent receivables in HDFC Bank is Rs.5 Crores. (Read more for Small Value Home Loans / Small Ticket Size Home Loans)
Also, read HDFC Bank Loan Against Property.
Q. Can an NRI apply for an LRD bank loan for lease house?
Ans: If an NRI can apply for a loan for house lease under the head – mortgage loan with the banks.
Also, read NRI Loan Against Property In India.
Q. Which bank provides the LRD loans for NRI in India?
And: ICICI Bank provides the LRD loans for NRIs in India.
Also read, ICICI Bank Mortgage Loan For NRI In India.
Q. Can I apply for an LRD loan top-up with HDFC Bank?
Ans: Yes you can apply for an LRD HDFC loan top up online as well as offline subject to your HDFC top up loan eligibility.
To know more about the HDFC top up loan process & HDFC top up loan offers speak to our experts on 9321020476.
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