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About Rent Discounting Loans

Having a property in commercial areas or in a residential area is a huge advantage- the main advantage among them is that when even ever you require money you can lease out your property to earn some good amount of rent. Apart from earning rent from property the rent receipt which you get or rent receivable you will get can be used it for raising a loan against property for business or personal loan. The loan which you get against the rent receivable is called the Rent Discounting Loan and can be approve against the current market value of your property and its discounted rentals. The loan agreement will be between the lender and the borrower and most of the term payment is the rent which will directly deposit in loan lender account will not be deposited in borrower account. The borrower has taken the loan based on the rent he or she will receive over the period of lease time.

Why Rent Discounting Loan?

Many banks will offer you a Rent Discounting Loan against the fixed rent you receive from your tenants against your rented property. The loan amount is evaluated against the earning potential of your property plus the current market value of your property. As the Rent Discounting Loan is a term loan the owner of the property can use the loan money for their professional as well as their personal use.

Is Rental Discounting Loan is for you or not?

If you are having a registered property and the registered agreement is between you and the lessee it can be a beneficial financial option to take a loan against the bills receivable from your rented property for personal or professional use as it is a term loan the rent amount which will be receive from your tenant will be directly deposited in the lesser account.

Features of Rent Discounting Loans

Mortgage:- You have to lease out your commercial or residential property

Amount of loan:- Maximum of 75 crore, the loan amount will always be less than or equal to 75% of current market value of your property

Property credentials:- No existing loan on the property, Title should be clear, at the time of application the lease agreement with your tenant should me more than 6 months

Time duration of loan:- Maximum up to 9 years

Documents for Rent Discounting Loans

The loan seeker needs to provide the list of documents to the financial institution or the Bank at the time of applying for Rent Discounting Loan to the lending institution or financial institutions. Some of them are as follows:-

  1. Complete Loan Application Form

  2. One Photograph of each applicant duly pasted and signed across on application form

  3. Photo Identity Proof (Any One) :-

  4. PAN Card, Passport, Driving License, and Voter’s ID card
  5. Residence Address Proof (Any One) :-

  6. Any utility bill (electricity/telephone/gas), Passport, Driving License, Voter’s ID Card, Ration Card, Leave & License Agreement
  7. For Salaried Individuals :-

    • Form 16 for Last 3 years / Annual Salary Certificate and Income Tax Return Ack.
    • Latest 6 months Salary slip
    • Bank statement/passbook copy with cover page for last 6 months
    • Employer’s ID Card copy
    • Appointment Letter / Increment Letter from the employer and also copy of previous employment letters if current employment is less than 2 years
  8. For Self Employed Business and Professionals :-

    • Last 3 years Income Tax Return Ack and complete set of financials, Audit Report, Tax payment challahs / TDS certificates
    • Last 12 months bank statements / Passbook copy with cover page of all bank a/c’s
    • In case of Company, Memorandum & Articles of Association, List of Directors and Shareholding Pattern on Company Letterhead, Latest Annual Return filed with ROC
    • In case of Partnership Firm, copy of partnership Deed
    • Company Business Profile
    • Office Address Proof (Any One) - Any utility bill (electricity/telephone), Shop & Establishment License, Leave & License Agreement, VAT / Service Tax Registration certificate
  9. Details of Existing Loans and Sanction Letters & Repayment statement of these Loans

  10. Credit Card details & latest credit card statement

  11. If Rental income is to be considered, copy of Rent Agreements

  12. Processing Fees chq

  13. Property Papers :-

    • Latest Agreement for Sale along with the previous chain / link agreements starting from 1st purchaser from builder to till date
    • Society Share Certificate (front & back side)
    • Latest Society Maintenance bill
    • Building sanction plan (Approved Plans) or Occupation Certificate

Additional documents required in case of Balance Transfer (BT) or Seller BT case:-

  • Foreclosure quotation / letter from the bank
  • Letter from the bank / financial institute stating list of documents held by them

NOTE : All documents need to be self attested by the respective applicants. For self employed, all income documents need to be certified by CA.

Benefits of Rent Discounting Loans

The Rent discounting loan provides you an option to take loan to meet your money requirement from the rent you receive from your residential or commercial properties. The loan amount can be used for business expansion, meeting your obligation, it can be availed by Self employee, salaried, Nonprofessional Self-employed, and some of the additional benefits of Rent Discounting Loan are as follows:-

  • Maximum Loan Amount

  • Maximum Tenure

  • Door step services.

  • Interest rate is low

  • Easy Documentation

Loan size ranges from 15 lakhs to 10 crore depending upon current market value of property.

Tenure:- Depends on existing lease agreement terms (Maximum up to 9 years)

Eligibility criteria for Rent Discounting Loan

The most important criteria for availing Rent Discounting loan, is to have a legal acceptable personal or commercial property. The property should be on rent to one or more than two tenants. Some of the condition for availing loan against property is as follows:

  • The leasing property should be on rent and should be earning from the past six months.

  • The property should be legal and have no obligation on it.

  • There should be a legal agreement between the tenant and the owner of property.

  • There should be creditworthiness between tenant and owner and should be accepted by banks.

Banks offering Rent Discounting Loans

Almost all the major banks and financial institutions are dealing in it

  • HDFC LTD

  • HDFC BANK LTD

  • AXIS BANK LTD

  • ICICI BANK LTD

  • YES Bank

  • State Bank of India

  • Bank of Baroda

  • Standard Chartered Bank

  • India Bulls Finance

  • Aditya Birla

  • DBS

  • Kotak Bank

  • Edelwise

  • DHFL

  • PNB Hosing Finance

  • Tata Housing