What is Lease Rental Discounting
This product is also called Future Rent Securitization .
This loan can be availed by an Owner of the property who has rented/leased out his/her property preferably to a corporate entity for a stipulated lease period.
In simple terms, this refers to lessor/borrower monetizing presently the future rental incomes to be received from a rented or leased property.
Both Residential & commercial property lease can be considered. The lease agreement has to be registered.The loan is provided to the lessor after discouting the total rent income. The market value of the leased property is also factored in.The percentage of rental discounting can vary from bank to bank. Generally discounting varies between 75% to 90% of the total rent receivables.
The unexpired lease term is taken into consideration.The bank gives weightage to the standing of the Lease. If the Lease happens to be a reputed corporate entity, rental discounting can be as high as 90%.
What are the End Uses of this loan?
Some of the Uses of LRD are:
- Used as a long term loan
- Business expansion
- Property renovation/modification
- Acquisition of property & other assets
- Individual needs like Marraige, education, healthcare etc.
Basic Product Features
What is the interest rate?
The interest rate applicable is similar to the Loan against Property rates. Currently, this varies between 13 to 15%.
What is the tenure?
The tenure granted generally is upto 9 years. The tenure depends mainly on the tenure of lease, especially the unexpired life of the lease.
How is the Repayment of Loan?
The Loan can be repaid through EMIs.
The EMI is serviced through the rent receivable which is deposited in an escrow account with the bank. The rent amount is deposited with the bank/lender & not the borrower.
What is the Quantum of Loan?
Like the Loan against Property, the maximum loan amount will be capped at between 55 to 65% of the value of the property.
What is the security for this loan?
The bank ensures that the rent receivable is credited to an escrow account with them. In addition, the leased out property will be taken as collateral for the loan.
Main bank charges involved are:
- Processing fees
- Stamp duty for loan agreement
- Other documentation charges
- Foreclosure charges
- Legal/Valuation/Technical charges
Some of the factors affecting Eligibility are:
- Satisfactory CIBIL Report
- Financial Performance over the past 3 years
- Healthy banking transactions
- The corporate standing of the Lease
- The property to be mortgaged has to clear the legal, technical & Valuation criteria’s of the bank. The title has to be clear & the property free from any encumbrance.
Banks and Financial Institutions offering Lease Rental Discounting
We deal with the top MNC, Private Sector, Nationalized & Co-operative Banks in India. We also facilitate lending from top NBFCs. We do not arrange for Private Finance.
Areas of Operation
The professional consultancy fees applicable will be communicated by a “ Letter of Mandate” which will outline the terms & conditions. The work on the proposal starts once the “Letter of Mandate” is formally accepted by the client.
Loan Documentation Requirements
Click the links below to see the list of documentation for: