Lease Rental Discounting (LRD Loan)

Lease Rental Discounting (LRD) is a secured funding facility offered against rental income from a leased or rented property. Simply put, borrowers can avail themselves of the funds by pledging the future lease as collateral, making it an effective way to access the value of a residential property. The full form of LRD is Lease Rental Discounting, and this type of LRD loan allows property owners to raise capital for business expansion and invest in new properties.

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Key Features of Lease Rental Discounting

Advantages of Lease Rental Discounting Facility

Get all your future rental income now
You can build another property against the amount you get
We can arrange escrow facilities for better repayment. So there is no burden to arrange the repayment. The lender, lessee, and you can arrange the escrow
Better cost of borrowing
Fast fundraising process
Better comfort to both borrower and lender

LRD Characteristics

1. Criteria

It is a secured loan in which the rented property is the collateral.
Provide loans against future expected rent.
Leased property with a lease of 5 to 10 years is provided with this loan.

2. Borrowers

The loan is available to salaried employees, professionals, and self-employed individuals.
Firms of all types can get loans
Property owners with known brands and corporate tenants are preferred borrowers. Retail also qualifies.

3. Loan Amount

Loan amounts range from 20 lakhs to 1 Cr, with some organizations offering up to 10 cr.
For an LRD loan, your EMI must be less than 80% of your monthly rent.
The loan amount is based on the expected rental income, but less than 80% of that amount.
The loan amount being less than 70% of the property’s market value plays a role in its determination.
Maximum tenure of 10-15 years but can be less.

4. Repayment of the Loan

An ESCROW account was created for loan repayment.
This account is for EMI and rent.
Lease rental discounting interest rates are 7-11%, similar to property loans.

Explore how we execute the LRD funding proposal.

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LRD Eligibility Criteria

Loan eligibility varies by organization and is influenced by several factors. General parameters include:

The income of the applicant should be stable.
Age criteria:
1. For salaried applicants: 21 to 60
2. For self-employed applicants: 21 to 65
Other liabilities that come along or that might occur in the case of loans taken by the individual or firms.

LRD Eligible Amount Calculator

Calculate the eligible amount based on rental income and lease expiry

Monthly Rental Income (LRD)

Lease Expiry Date

Eligible Amount

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Note: This amount may vary based on tenant's profile and other factors.

Documents to Appy for LRD Facility

To apply for a lease rental discounting loan, you need to provide several documents to the lending institution. The documents vary from case to case, but here are some important ones:

A completely filled-out application form for the loan.
Recent photographs of the applicant.

For Salaried Individuals

3 to 6 months of salary slips.
Income Tax Returns proof or latest Form No. 16.
Bank statement for the last 6 months of the salary account.

For Self-employed individuals and firms:

Business profile of the company.
Memorandum of Association (MoA)
Articles of Association (AOA)
Partnership deed
ITR of the company for the last 3 years
Profit and loss statement
CA-certified balance sheets

Note: The application must be signed by all the directors of the board if the loan is being taken for the firm.

Here’s a detailed LRD Loan guide where we have explained its Meaning, Benefits, Eligibility, & How It Works.

Lease Rental Discounting at Terkar Capital

We at Terkar Capital offer exceptional support and hassle-free execution, consistently sanctioning LRD loans for eligible clients and establishing escrow facilities to ensure smooth repayments. We are committed to providing comprehensive support throughout the entire process.

Despite its proven credibility, the concept of Lease Rental Discounting is often misunderstood. Lenders can be selective in offering LRD finance, making it crucial for businesses and individuals to collaborate with experienced financial advisors to secure seamless access to these funds.

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FAQs on Lease Rental Discounting

The lender discounts future rental cash flows to determine the loan amount, and the borrower repays the loan through monthly installments, often aligned with the rental income.

Commercial properties (offices, shops, warehouses) and residential properties with a registered lease agreement.

It provides liquidity by utilizing rental income as collateral without requiring the property to be liquidated.

LRD is a loan provided against future rental income from property, while a home loan is for purchasing a home with a monthly installment.

The loan amount provided by the Lender as a percentage of the property’s market value is typically 50-80%

Individuals, partnerships, LLPs & companies that own property and have made a lease agreement with the tenant

Rental income is used to determine loan amount and acts as collateral for LRD

We Facilitate the Following Funding Instruments

Client Feedback

What our clients think about us?

D*** Shinde

Terkar Capital has demonstrably improved the quality of funding candidates presented to us. Their rigorous client selection process, including a deep financial analysis, gives us confidence in the businesses we evaluate. Their professionalism and execution are top-notch, making them a trusted partner for any financial institution seeking qualified borrowers.

Pratibha K***

Thank You for the numerous financing options that you make available at a lower cost of borrowing. Terkar Capital not only provides transparency but also values the time of its clients. We appreciate the minimal time you took to provide funds to the company. Highly recommend Terkar Capital for funding requirements.

Harshada T***

We are very thankful to Terkar Capital for your efforts in arranging facility. Their approach is very simple, professional, and fast! The team is highly responsive that executed the process in short span of time without any hassles. Great work... Thank you!

M Dwivedi

Obliged for the services by Terkar Capital in helping secure funds for the business. They offer a broad range of advanced funding solutions and deliver financial solutions that are right for customers. Grateful for the services rendered by your firm.