Lease Rental Discounting (LRD) Loans

What is LRD?

LRD meaning is that you have mortgaged/leased your income-producing (through fixed rent) commercial assets/property to the lender as a collateral to generate funds instantly. You get a term loan against the mortgaged property that can be used for any purpose.

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• Purpose: The LRD in banking  can be availed for any productive purpose such as repairs or renovations of the building, purchase of property, acquisition, expansion, projects or any other business related requirements such as additional funds requirement, refinance of existing debt, and so on.
• Loan amount: Depending on the bank’s norms, you can get up to 80% of the total future rent receivable, subject to a minimum of Rs. 5 Lakhs and maximum up to Rs. 500 Crores.
• Rate of interest: The LRD rate of interest varies from lender to lender and starts from 7.75% p.a. onwards. 
• Repayment tenure: The LRD Loan can be repaid in equated monthly instalments (EMIs) in flexible tenure ranging between 3 to 18 years. Generally, the loan has to be repaid through an escrow account.
• Processing fee: Depending on the lending bank’s policy, the processing fee on LRD Loan can go up to 2% of the loan amount plus applicable taxes. 
• Prepayment charges: The LRD loan can be prepaid in part or full with a prepayment charges of 0% to 5% of the outstanding limit plus applicable taxes, after a 6 months lock-in period.

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• Applicants should be at least 18 years old at the time of loan application and up to 65 years at loan maturity.
• Applicants should be a residing citizen of India.
• Applicants should own properties in metro, urban, or semi-urban areas.
• Applicants should have rented out their properties to Public Sector Undertakings (PSUs), Government, Semi-government, or Reputed Corporates, Banks, Financial Institutions and Multinational Companies (MNCs).
• Security for the loan is charged by way of an equitable mortgage of the property to be financed and/or any such other collateral security as may be deemed fit by the bank.
• The bank may ask for any additional/ interim security as acceptable to the bank.

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The LRD rate of interest can be floating or fixed in nature. The LRD rates are highly affordable unlike unsecured loans. Currently, the rate of interest varies from lender to lender and starts from 7.75% p.a. onwards.

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• Processing fee: Up to 2% of the loan amount + applicable taxes. 
• Part prepayment charges: Up to 3% of the outstanding limit + applicable taxes.
• Foreclosure charges: 0% to 5% of the outstanding limit + applicable taxes.
• Duplicate NDC/NOC charges: Rs. 50 per instance.
• Penal interest: 24% per annumon the overdue installments.
• Stamp duty & other statutory charges: As per applicable laws of the state.
• Cheque bounce charges: Rs. 339 per instance.
• Cheque/instrument swapping charges: Rs. 500 per instance.
• Duplicate statement issuance charges: Rs. 200 per instance.
• Photocopy of Title Deeds issuance charges: Rs. 500 per document set.
• Credit report issuance charges: Rs. 50 per instance.
• CERSAI charges: Rs. 50 for loans up to Rs. 5 Lakhs and Rs. 100 for loans above Rs. 5 Lakhs.

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• Application form: Duly filled loan application form with recent passport size photograph.
• Identity proof: Voter ID Card, Driving License, Job Card issued by NREGA, Aadhaar Card, PAN card (any one).
• Age proof: PAN Card, Passport, any other Certificate from Statutory Authority (any one).
• Residence proof: Passport, Driving License, Election Card, Telephone Bill, Ration Card, any other Certificate from Statutory Authority (any one).
• Income proof: Bank statements of last 6 to 12 months reflecting the rental credits in the account, ITR (self and business) with Profit & Loss Account and Balance Sheets of the last 3 years, duly certified/audited by a Chartered Accountant.
• Processing fee cheque: In favour of the lending bank.
• Property documents: Photocopy of title documents of the property, approved plan, copy of registered/unregistered Lease Agreement between Lessor and Lessee, sale deed, agreement to sale of the property, valuation of the property, and Title Search Report to establish that the rightful ownership of the property belongs to the Lessor.

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• PNB Housing LRD Loan
  • Loan amount: Up to 80% of the total future rent receivable within the unexpired period of lease deed. 
  • Tenure: Up to 10 years or remaining lease period through an escrow account.
  • Rate of interest: 7.75% to 10.65% p.a.
• Bajaj Finserv LRD Loan
  • Loan amount: Up to Rs. 5 Crores.
  • Tenure: Up to 18 years.
  • Rate of interest: 8.35% p.a. onwards.
  • Foreclosure charges: 0% - 4% + applicable taxes
• Cosmos Bank LRD Loan
  • Loan amount: To be calculated based on Net Lease Rent Receivable. 
  • Rate of interest: 9.50% p.a. onwards
  • Tenure: Up to 15 years
  • Prepayment charges: Nil
• Dhanlaxmi Bank LRD Loan
  • Loan amount: Up to 70 % of the market value of your property.
  • Tenure: 3 to 10 years.
  • Rate of interest: Varies depending on the loan amount, property type, lessee profile, rental income, etc.
  • Foreclosure charges: 2% to 5% + applicable taxes.
• ICICI Bank LRD Loan
  • Loan amount: Up to Rs. 5 Crores
  • Tenure: Up to 15 years.
  • Rate of interest: 8.35% to 9.50% p.a.
  • Processing fee: Up to 2% of the loan amount + applicable taxes.
  • Administration charges: Rs. 5,000 or 0.25% of the loan amount + applicable taxes, whichever is lower.
  • Prepayment charges: Up to 4%.
• SBI LRD Loan
  • Loan amount: Rs. 10 Lakhs to Rs. 500 Crores
  • Processing fee: As per extant instruction.
  • Rate of interest: Competitive rates linked to MCLR.
• Axis Bank LRD Loan
  • Loan amount: Rs. 5 Lakhs to Rs. 5 Crores.
  • Tenure: Up to 9 years.
  • Rate of interest: 7.90% to 9.30% p.a.
  • Processing fee: 1% of the loan amount or Rs. 10,000, whichever is higher.
  • Prepayment charges: Up to 3%.
• Bank of Baroda LRD Loan
  • Loan amount: Rs. 25 Lakhs to Rs. 200 Crores.
  • Tenure: Up to 10 years.
  • Rate of interest: 8.80% to 10.80% p.a.
  • Processing fee: 0.50% of the loan amount, minimum of Rs. 1,000 and maximum of Rs. 1 Lakh.

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Calculating the LRD loan EMI is easy. You can use the Lease Rental Discounting Loan EMI Calculator to calculate your loan EMI. All you need to do is open the calculator available online and enter a few details, i.e. the loan amount required, repayment tenure, and the rate of interest on the loan.

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Follow the steps mentioned below to apply for Lease Rental Discounting loan:

• Visit the official website of the preferred lending bank.
• Go to the ‘Lease Rental Discounting Loan’ and click on the ‘Apply Now’ button.
• Fill in the entire application form with accurate information.
• Submit or upload the required documents.
• The representatives of the bank will get in touch with you within a few hour to guide you with the further process.
• Once your application is approved by the bank, the approved loan amount will get credited in your bank account.

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