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Many people own commercial spaces and offer them on lease. Leasing such spaces has its own share of advantages, one of them, is being able to raise a Term Loan against the rental income received. Lease Rental Discounting (LRD) is a Term Loan offered against income-producing commercial assets/property. The LRD Loan works on the premise that your leased property derives fixed rent, which you can use as a ‘Collateral’ to generate funds.
Lease Rental Discounting Benefits & Features
Documents Required for Lease Rental Discounting (LRD)
Proof of Identity and Residence
- Aadhaar Card, PAN Card, Passport, Driving Licence. PAN Card issued in India is no longer considered a valid proof of identity.
Proof of Income
- Income documents (Financial & ITR) not required
- Last 6 months’ Bank Account Statements, having rental credit
- Last 6 months’ Bank Account Statements, for all other operating bank accounts.
Others
- Lease Agreement papers
- Duly signed Application Form
- Photographs.
ELIGIBILITY
Any resident or non-resident individual can apply for the LRD Loan
Both salaried and self-employed professionals (including doctors, engineers, dentists, architects, chartered accountants, cost accountants, company secretary and management consultants) can apply
You can avail of the lease rental discounting loan, for a maximum tenure of 15 years
The minimum lease period should be 3 years
Funding will be given only against self-occupied, commercial or specialised properties
Escrow account should be opened with ICICI Bank, to enable the credit of rentals against the loan sanctioned.
Lease Rental Discounting Related FAQs
If you want to apply for the Term Loan, you need to meet the following Lease Rental
Discounting Eligibility criteria:
- Any Resident Indian or NRI can apply for the loan
- Any salaried individual working in the Public or Private Sector, can apply for the Lease Rental Discounting
- Any self-employed professionals, including doctors, lawyers, chartered accountants, consultants, architects, can also apply
- Self-employed non-professionals like traders, manufacturers, distributors
- Any Public or Private Limited Companies, Partnership Firms, or Proprietorship firms, can apply for the LRD Loan.
Following are the Lease Rental Discounting fees and charges, to avail of the loan:
- If you avail an LRD Loan, you are required to pay a Loan Processing Fee / Renewal charges of 2% plus applicable taxes
- Administration charges will be Rs 5,000 or 0.25% of the Loan Amount plus Applicable Taxes, whichever is lower
- If you are pre-paying the loan amount any time after 6 months, from the date of the disbursement of the loan, you will have to pay pre-payment charges at the rate of 4% plus applicable taxes.
No. The Lease Rental Discounting or LRD Loan is applicable only for commercial properties or specialised properties, such as warehouses, industries, schools, hotels, hospitals, banquet properties, marriage gardens, etc. If you yield rental income from any of these properties, you can avail an LRD Loan.
The maximum loan term for the Lease Rental Discounting is 15 years. For specialised properties, the Lease Rental Discounting loan tenure is 10 years.
To apply for the loan, you need to submit the Lease Rental Discounting documents that are as follows:
- Proof of ID – PAN Card, Aadhaar Card, Passport, Driving License
- Proof of Income – Last 3 years’ ITR and Balance Sheet Account Statements, last 3 years’ Profit and Loss Account Statements, last 6 months’ Current Account Statements having rental credits, last 6 months bank statements of all other operating accounts
- Proof of Property – Copy of the Leased Agreement.
