Lease Rental Discounting ( LRD ) a Term Loan offered

Lease Rental Discount (LRD)

Leverage Your Rentals for Growth

Maximize Your Rental Income Potential with Lease Rental Discounting (LRD)

Lease Rental Discounting (LRD) is a financial product offered by banks and Non-Banking Financial Companies (NBFCs) to property owners who earn rental income from leasing out their properties. Here’s a detailed overview of LRD:

Why Choose MyFinCorp LRD?

Definition: LRD is a loan facility where lenders provide funds to property owners against the rental income they receive from tenants (lessees). Instead of using the property itself as collateral, the lender considers the rental income as the primary security for the loan.
Eligibility: Property owners who have leased out their commercial properties (such as offices, retail spaces, warehouses) or residential properties and receive regular rental income are eligible for LRD. The lessees should be reputed corporate entities or organizations with strong financials.
Loan Amount: The loan amount sanctioned under LRD is typically based on the monthly or annual rental income generated from the leased property. Lenders may offer up to a certain percentage (usually around 70 – 90%) of the net present value of the future rentals.
Interest Rates: LRD interest rates can be fixed or floating, depending on the lender’s policies and market conditions. These rates are generally competitive because the rental income provides a steady and reliable source of repayment.
Tenure: The repayment tenure for LRD can vary from a few years to up to 15 years, depending on the lender and the agreement between the borrower and the lender. The tenure is often aligned with the lease agreement duration and the expected continuity of rental income.
Documentation: Borrowers need to provide documents including lease agreements, rental income receipts, property documents (title deed, sale deed), bank statements, and KYC documents for themselves and the lessees.
Processing Fees and Charges: LRD may involve processing fees, administrative charges, and legal fees. Borrowers should clarify these charges with the lender to understand the total cost of availing the loan.
Insurance Requirements: Lenders may require insurance coverage for the property against risks like fire, natural disasters, and liability. This ensures protection for the property that generates rental income.
Benefits: LRD provides liquidity to property owners without selling the property, allowing them to use the funds for business expansion, debt consolidation, property improvements, or other investments. It also offers tax benefits on the interest paid.
Repayment: The loan is typically repaid through EMIs (Equated Monthly Installments) from the rental income received. In some cases, the borrower may need to contribute additional funds if the rental income fluctuates or is insufficient to cover the entire EMI.

10.5%

Interest Rate

Starts from 10.5 to 12.0%

80%

Loan Amount Range

Up to 80% on Property value

1.0%

Fees and Charges

Start from 1.0% to 2.0%

For Salaried Employees

KYC: Applicant and Co-Applicant

PAN Card (Mandate)
Aadhar Card (Mandate)
Voter ID (optional)
Driving License (optional)
Passport (optional)
Latest Passport Size Photo
Employer ID card
Resident Address Proof

Income Proof Documents:

3 months Pay slips (Latest)
IT returns for the past 2 years or Form 16 or PF ( Provident Fund ) Statement
6 months Bank Statement latest where your salary is credited

For Self-employed

KYC: Applicant and Co-Applicant

PAN Card (Mandate)
Aadhar Card (Mandate)
Voter ID (optional)
Driving License (optional)
Passport (optional)
Latest Passport Size Photo

Income Proof Documents :

Income Tax Returns ( ITRs ) for the Last 3 years ( Along with Profit & Loss and Balance sheet and Computation of income)
Office or Shop Business Registration Certificate.
One year Bank Statement from personal a/c and Current Account
GST registration certificates, 1 year GST monthly returns (if applicable.)
Partnership deed in case of partnership firms (if the applicant is one of the partners).
Certificate of Incorporation in case of Limited or Pvt. Ltd Company (if the applicant is one of the Directors).

For NRI

KYC : Applicant and Co-Applicant

Valid passport and visa (attested copy)
PAN, Driving License, Aadhar Card
Address proof with the current overseas address
Documents must be attested by Overseas Notary Public or Indian Embassy/Consulate.
passport size photograph
Employer identity card

Income Proof Documents for NRI

For Salaried
- Employment contract Letter with an English translation (if it’s in another language)
- Last 6 months’ salary slips or salary certificate
- Last one Year bank statements showing salary credits
- Latest Individual Tax Return (duly acknowledged copy) except for NRIs/PIOs located in Middle East countries & Merchant Navy employees.
For Self-employed
- Business address proof
- Income proof in case of Self-employed Professionals / Businessmen.
- Last 2 years’ balance sheet and P&L accounts (audited / C.A. certified).
- Last 2 years’ Individual Tax Return except for NRIs/PIOs located in Middle East countries
- Last 12 months’ bank statements of overseas account(s) in the name of individual as well as company.
GPA ( General Power Attorney ) PAN, Aadhar Who is Staying in India

Property documents

Agreement of Sale
Mother link Document Copies of all, that can establish the chain of ownership for the past 20 years.
Building Construction Permission Plan
Encumbrance certificate for 20 years
Property tax paid receipt

LRD is a loan offered against the rental income generated from a property leased out to tenants. It allows property owners to leverage their rental income to secure financing from banks or financial institutions.

The loan amount in LRD is typically determined based on the discounted value of the future rental income expected from the leased property. Banks or lenders calculate this based on factors such as the lease agreement, rental yield, and property valuation.

LRD is generally available for both commercial and residential properties that generate stable rental income. This includes office spaces, retail outlets, residential apartments, and industrial units among others.

Eligibility for LRD varies among banks and financial institutions but generally includes factors such as the stability of rental income, the creditworthiness of the borrower, property valuation, and compliance with legal requirements.

LRD offers flexible repayment terms tailored to the borrower's cash flow and rental income stream. Repayment can typically be structured through equated monthly installments (EMIs) over a specified period, often aligned with the lease agreement tenure.