February 23, 2018 No Comment. Posted in Financial Literacy

In India, owning a residential or a commercial property has its own advantage – a solid asset owner and an extra source of income by leasing the premises for rental income. Apart from monetary advantage of the property the owner is also benefited with the rent received from the premises. Many corporations and individuals earn a notable portion of income as a rent that they get from their immovable assets. The finance need can be different from others but they also have to go through the same procedures as others. Instead of directly approaching the financial institution the borrower can easily check the credit score, eligibility and EMI estimation on the website of Mudra Home for free. The borrower for lease rent discounting should have a good credit score to be eligible for the availability.

Lease Rent Discounting

Lease rent discounting is a loan which is availed against the rent receipts obtained from lease contracts with the corporate tenants. It is a term loan and another way to get funds from Banks/ NBFC’s. LRD is an agreement between the premises owner, the tenant and the bank or financial institution. This is a facility provided by the financial institutions to encash your current rental income and avail a long term loan on it or we can say that it is a loan which is availed on the rent received from the owned property. The rent from the rented premises is considered as a fixed income and the loan is given to the borrower considering the rent received for the stipulated tenor. The rent is a major term of repayment and is deposited with the lender instead of the borrower. The sanctioned loan amount is based on the rent received over the agreed period of time. The rented premises can be leased by a Bank, multinational company, AA* or AAA* rated corporate or government / semi government undertakings.

Documents required for the LRD

Similar to any other loan LRD also require the borrower to submit the following documents to the Bank/ NBFC or any other financial institution while submitting the LRD application form. The financial institution may demand certain documents on a periodical basis or in a post sanction phase. The following table explains the detailed documentation required

Doccuments Required For Lease Rental Discounting (2)
The funds obtained with LRD can be used to expand your business, consolidate your obligations or business capital requirements. Lease rental discounting loans can be availed by salaried, self employed professionals and self employed non professionals. Loan amount varies between 15 Lakhs to 25 Crores and the tenor depends on the agreed terms and conditions. Property value, age, repayment capacity, assets and liabilities, legal and technical clearance of the property are the few eligibility criteria to be eligible for the loan.

For any assistance to improve the credit score or to know any further information, the team of Mudra Home is available 24 x 7.

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