Lease Rental Discounting (LRD) Loan

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.

• 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 a maximum of up to Rs. 500 Crores.
• Rate of interest: The LRD rate of interest varies from lender to lender and starts from 8.99% p.a. onwards.
• Repayment tenure: The LRD Loan can be repaid in equated monthly instalments (EMIs) in a 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 the 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 in full with a prepayment charge of 0% to 5% of the outstanding limit plus applicable taxes, after a 6-month lock-in period.

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 8.99% p.a. onwards.

• 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 resident citizens 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 Corporations, 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.

• Application form: Duly filled loan application form with a 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 a Statutory Authority (any one).
  Residence proof: Passport, Driving License, Election Card, Telephone Bill, Ration Card, any other Certificate from a 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.

• 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 annum on 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.

• PNB Housing LRD Loan
  • Loan amount: Up to 80% of the total future rent receivable within the unexpired period of the lease deed.
  • Tenure: Up to 10 years or the remaining lease period through an escrow account.
  • Rate of interest: 8.99% to 11.85% p.a.
• Bajaj Finserv LRD Loan
  • Loan amount: Up to Rs. 5 Crores.
  • Tenure: Up to 13 years.
  • Rate of interest: 9.00%-14.00% p.a. onwards.
• ICICI Bank LRD Loan
  • Loan amount: Up to Rs. 3 Crores.
  • Tenure: Up to 15 years.
  • Rate of interest: 10.85%-12.00% p.a. onwards.
• Axis Bank LRD Loan
  • Loan amount: Starting from Rs. 5 Lakhs.
  • Tenure: Up to 9 years.
  • Rate of interest: 9.90%-10.30% p.a. onwards.

Follow the steps mentioned below to apply for the 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 hours to guide you through the further process.
• Once your application is approved by the bank, the approved loan amount will be credited to your bank account.