Points to Know When Applying for a Lease Rental Discounting

This is a loan product tailored for people who enjoy a significant rental income from their residential or commercial property. If you are applying for this loan, you will have to pledge the future rental income from your property to the lender which means, you will be getting the money upfront and the lender will get the repayment in the form of your rental income every month.

Lease rental discounting is the perfect option if you have a good income through property rent but you are unable to leverage it directly for a loan. This is a common issue if the property already has a loan against it.

In this type of loan, only 75–80% of the value of the property’s rental income for the remaining lease period can be obtained as loan. Compared to other types of property loans, the duration or tenure for lease rental discounting is shorter. This is because it is usually linked to the amount of time left for the property lease to expire. If you can demonstrate the ability to pay installments for this loan, some lending institutions may discount up to 90% of the value of the remaining lease on the property.

Be it a home loan in Mumbai or lease rental discounting, the lender of your choice should reputed. Lenders or lending institutions determine the eligibility of a borrower on the basis of the following factors:

• Current rental income

• Dynamics of the lease agreement

• Current EMIs or loans in the name of the borrower

• Credit history

• Type of property being bought. For instance, if you are buying a property that is under construction, the lender will be assessing the credibility of the developer and the real estate company’s past performance on their projects