The best way to monetise your property

Have you explored Lease Rental Discounting to raise funds against your owned premises? Read on to know more about how it works, and how it benefits you.

Indians have traditionally gravitated towards three investment options to create wealth: gold, fixed deposits and real estate. Of these, real estate has become a rich man’s game in today’s times. Property prices continue to spiral out of the reach of most people, and those who own residential or commercial premises are extremely lucky to have such a valuable asset, indeed.

Property normally appreciates in value; thus it yields a profit when one liquidates it. Property also comes in handy when you need money in an emergency. Those who require a large amount of funds can either sell the property, or borrow a mortgage against it. However, there is a third option that is also being explored by a lot of property owners in India today – it is known as the Lease Rental Discounting (LRD) loan.

What is LRD loan?

It is a loan product that you can avail of if you have owned property that you have leased out. It helps you maximise the rent potential of the property such that you can borrow a loan against the rent you collect against the premises. Prominent banks and financial institutions in India calculate the lease rental discounting loan amount basis the rent potential of the property and its current market rate (in conjunction with the year’s ready reckoner rates). 

This is how the LRD loan is computed: The lending institution assesses the property rate, the current registered lease agreement, market rate of the property and the locality, rent receipts for at least six months, share certificates for the property issued by the building society, financial profile (in case of a company borrowing the loan) and the owner’s credit history. 

The lease must be in force for at least six months before the date of application for the loan. The loan amount is then calculated on the basis of the current rent being collected, plus the projected future rent receivables.

Advantages of Lease Rental Discounting

From granting the LRD loan only to commercial properties, these loans are today also approved for residential properties that have been leased out. Individuals as well as businesses can borrow this loan. The potential for getting a higher loan amount rises based on the rent potential of the property, and the demand for that property on a year-on-year basis.

The lease rental discounting loan helps individuals and companies raise money for a variety of requirements. The best LRD loans in India have tenures spanning up to 15 years, balance transfer option and doorstep services.