Lease Rental Discounting

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This is product tailored for people who have significant rental income. Under Lease rental discounting, the borrower avails a loan by pledging the future rental income to the lender. In this way the borrower can get money upfront in lieu of the rental income which would come to him over a period of time. This product is typically useful for people who have significant rental incomes but at the same time may not be able to leverage their property directly and avail a loan against it. This could be because the property may already have a loan against it. One does need to remember that only 75-80% of the value of the rental income for the remaining lease period is what the user can expect to avail as a loan amount. The tenure or duration of such loans is much shorter than other property based loans and usually linked to the amount of time remaining for the lease on the property to expire. Most institutions discount upto 90% of the value of the remaining lease, provided the borrower can demonstrate the ability to pay the installment for such a loan.

Who is eligible for the Lease Rental Discounting loan?  

The product is designed to finance the business needs of:

  • Sole proprietors/proprietorship firms
  • Partnership firms
  • Private-limited and public-limited companies
  • Professionals – doctors, architects, chartered accountants, business consultants
  • Business entities with a Rs. 90 lakhs to Rs. 185 crores turnover are eligible

What do I need to give as security?  

Rent receipts are payable by the tenant directly to an escrow account with Standard Chartered Bank. The underlying tenanted property, which may be commercial property or quasi-commercial property, will be taken as collateral. No plot, self-construction or under-construction properties will be allowed

What are the basic documents required for applying for the facility? 

  • Lease agreement
  • Bank statements for the last 6 months
  • 2-year financials including Profit & Loss (P&L) statement, balance sheet and income tax returns
  • Documents related to establishment of entity, identity and address proof documents.
  • Property title documents
  • Specific details will be provided by the Relationship Manager

What is the maximum loan amount offered for the Lease Rental Discounting loan?

You can avail a maximum loan of Rs. 250 crores subject to eligibility conditions being met

How is my eligibility determined for a Lease Rental Discounting?

Your eligibility is determined after looking at the following:

  • Your current rental income
  • Dynamics of the lease agreement i.e. when was the lease signed, what is the balance tenure of the lease, what are the key terms etc.
  • Your current obligations i.e. the other Installments (EMIs) you are currently paying, the number of credit cards and credit limits you have or use,
  • Your past credit history
  • The lending bank or institution will also consider which property you are buying. In the event it is a property under construction by a developer, the credibility of the developer and past performance on their projects will also determine how much the lender is willing to lend against such a property

What is the maximum tenure of the loan?

The maximum tenure for which you can avail the facility is determined by the lease tenure and is capped at 12 years

What is the interest rate on the facility?

We offer attractive interest rates on the facility depending on the loan amount, credit assessment and other parameters. Further details will be provided by our sales officer.

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