Lease Rental Discounting (LRD): Unlock the Power of Your Rental Income
About LRD:
- LRD is a loan offered against the rental income received from tenants occupying a commercial or residential property. This product allows property owners to leverage their future rental income to obtain a loan, which can be used for business expansion, working capital needs, debt consolidation, or any other financial requirement.
- LRD enables property owners to unlock the potential of their rental earnings while continuing to receiving rent and retaining ownership of the property.
- LRD is provided based on discounted (present) value of future lease rental income, generally with a margin of about 15% to 30% of the discounted value computed.
- The Lender assesses the eligible amount as above in addition to perusal of the registered Lease Deed and after ensuring the credibility of the Lessees.
- Value of the property and its location also influence the loan approval. Properties in prime areas with high market value typically attract better loan terms.
- Both residential and commercial properties are eligible for LRD, but commercial properties like office spaces, retail outlets, and warehouses often fetch higher loan amounts.
- As the loan is secured against the rental income and the property itself, LRD generally comes with lower interest rates compared to unsecured loans.
- The tenor of the LRD loan is typically aligned with the lease term.
- Thus, LRD can convert your rental income into immediate liquidity without having to sell your property, thereby ensuring long-term wealth generation.
- If the loan is used for business purposes, the interest paid on LRD may be eligible for tax deductions under certain conditions.
