Lease Rental Discounting: LRD Loan Against Rental Income

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What is Lease Rental Discounting LRD ?

Lease Rental Discounting (LRD) is a loan offered against the rental income earned from a leased property. Simply put, it allows property owners to borrow money by using their future rent as security. The loan amount is calculated by discounting the expected rental cash flows from a property that is already leased and generating regular income.

If you own a residential, commercial, or warehouse property with a registered lease agreement, an LRD loan in India can help you unlock funds without selling your asset.

A long-term lease agreement with a tenant
The property's rental yield
Rent is directed into an escrow account to ensure timely loan repayment.
Flexible repayment tenures are available, up to 25 years.
Loan amounts typically range from a few lakhs to several crores

Lease Rental Discounting Benefits & Features ?

Lease Rental Discounting enables property owners to access immediate funds without selling their assets. The loan is secured against the rental income and property market value, making it a low-risk, high-value option.

Unlock value from rental income

Maintain ownership of the property

Use funds for personal or business purposes

Quick access to large loan amounts

Common Use Cases:

Business expansion

Funding medical emergencies

Child’s education or marriage

Working capital needs

Key Features, Benefits and Risks of LRD for Borrowers

Collateral

Residential, commercial, or warehouse property currently under lease.

Loan Amount

Minimum ₹50 lakhs; maximum as per property valuation and bank norms.

Tenure

Up to 15 years.

Lease Rental Discounting Interest Rate:

Competitive rates based on lease terms, credit profile, and market trends.

Top-up Facility:

Option to transfer existing loans with additional funding.

Quick Processing

Streamlined documentation and faster disbursal.

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How Does Lease Rental Discounting (LRD) Work?

Rental Income as Collateral

Property owners can use rent receipts from active lease agreements as collateral while applying for a lease rental discounting loan.

Direct EMI Routing

The process is streamlined as rent payments are directly routed to the bank and adjusted against the loan EMI, instead of being credited to the property owner first.

Loan Amount Determination

Each bank follows its own assessment criteria, but typically borrowers can avail a loan of up to 70% of the property’s market value, subject to rental income, lease tenure, and tenant profile.
This structure makes LRD a convenient way to unlock funds from rental properties while ensuring smooth and disciplined loan repayment.

Eligibility Criteria for Lease Rental Discounting (LRD)

To apply for a Lease Rental Discounting (LRD) loan with Aditya Birla Capital, applicants need to meet basic requirements related to age, income profile, and the leased property. These conditions ensure steady rental income and comfortable loan repayment.

Salaried Individuals

Individuals working in permanent roles with government institutions or well-established private companies are eligible. The applicant should be at least 24 years old at the start of the loan and within the retirement age at the time of loan maturity.

Self-Employed Individuals

Self-employed applicants who file regular income tax returns can apply. The minimum age at loan commencement is 24 years, and the applicant should be no older than 65 years at loan maturity.

Self-Employed Professionals

Professionals such as doctors, engineers, dentists, architects, chartered accountants, cost accountants, company secretaries, and management consultants are eligible. Applicants must be 24 years or above at loan start and 65 years or below at loan maturity.

Lease Rental Discounting (LRD): Property & Tenant Requirements

All resident individuals may apply, provided the tenant is a company registered under the Companies Act, 1956. Loans are offered only against ready commercial properties and are capped at 85% of the net present value (NPV) of future rentals or 50% of the property’s market value, whichever is lower.

Documents Required for Lease Rental Discounting (LRD)

To process an LRD loan with Aditya Birla Capital smoothly, applicants must submit documents related to identity, income, credit history, and the leased property.

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Common Documents for All Applicants

● Loan Application Form: Completed and signed application form with a recent passport-size photograph ● Identity Proof: PAN card, Aadhaar card, Passport, or Voter ID ● Address Proof: Passport, driving licence, or latest utility bill ● Bank Statements: 6–12 months’ statements showing rental credits or routine transactions ● Existing Loan Details: Sanction letters and repayment schedules, if applicable ● Credit Report: Latest CIBIL report reflecting credit behaviour and repayment track record

Property-Related Documents

● Proof of Ownership: Title deed, sale agreement, or earlier ownership papers ● Lease Agreement: Registered lease deed or leave and licence agreement with the tenant ● Valuation Report: Property valuation from an authorised valuer stating current market value ● Approved Layouts: Copies of approved building plans or layout drawings ● Property Tax Receipts: Latest paid receipts confirming no outstanding dues

Additional Documents for Salaried Applicants

● Salary Slips: Most recent 3–6 months’ salary slips ● Form 16: For the last two financial years ● Income Tax Returns: ITRs for the previous two or three years ● Employment Proof: Appointment letter or annual CTC letter for verification

Revision of Reference Rates for determining Interest Rates on loans given

A high credit score signals reliability to lenders and can help you get lower personal loan interest rates.

High existing debt can lead to higher interest, as lenders see more risk in lending to heavily indebted borrowers.

Stable income and employment history make you eligible for personal loans with low interest rates, as lenders perceive lower risk.

Different banks and NBFCs have varying interest rate structures, so comparing offers helps identify the personal loan minimum interest rate available to you.

Larger loans or longer repayment tenures may attract slightly higher personal loan rates due to increased risk.

How to Apply for Lease Rental Discounting Online

STEP

Visit the Official Website and navigate to the ‘Loan Against Property’ section.

STEP

Select LRD Loan Option under eligible loan types.

STEP

Fill Out Basic Details such as property information, lease terms, and personal credentials.

STEP

Upload Required Documents including the lease agreement and property title.

STEP

Wait for Verification and Approval. Post-verification, funds will be credited to your account upon successful approval.

Customer Satisfaction Stories

Mr. Hiralkumar Ashokbhai Patel

Aditya Birla Finance Customer

The digital platform and whatsapp service of ABHFL gives me a quick access to my basic loan details such as statement of accounts, loan account details, interest certificate, and repayment schedule.

Mr. Arpit Jain

Aditya Birla Finance Customer

Gurgaon, India

Mr. Pramod Kumar Saini

Aditya Birla Finance Customer

Highly appreciate the speed of work at ABHFL, my overall experience in the home loan journey was good.

Mr. Dharmendra Kumar

Aditya Birla Finance Customer

Meerut, India

Mrs. Snehal Rajpure

Aditya Birla Finance Customer

FAQs on Lease Rental Discounting

LRD allows banks and NBFCs to provide secured loans with lower default risk. The predictable rental income stream ensures better repayment reliability, making LRD a preferred asset class in property-backed lending.

LRD is calculated by discounting future rent receivables using a standard discounting rate. The ideal loan-to-value (LTV) ratio is typically 50–70% of the property’s market value, based on risk profile and lease terms.

LRD can be availed against leased residential, commercial, and warehouse properties, provided the lease is active, legally registered, and with a reputed corporate tenant.

If used for business purposes, the interest paid on LRD may be deductible as a business expense under Section 37(1) of the Income Tax Act. Always consult a tax advisor for personalized guidance.

Yes, most LRD loans come with prepayment and foreclosure options. Charges vary based on whether the loan is on a fixed or floating rate and if the borrower is an individual or entity. Please refer to the applicable Schedule of Charges for details.