LRD loan, is a secured term loan obtained by property owners against the rent receivables and against their property without change of ownership. LRD is always availed against leased or rented out commercial, industrial, and Specific use properties. The amount you can borrow is based on the monthly rental income against the permissible market value of the property.
LRD loans are provided both by banks as well as Non-Banking Finance Companies (NBFCs).

• Loan Tenure – The tenure of the loan depends on the period of rental/lease period between the lessor (Owner) and lessee (tenant). Most of the times the max term may be restricted to 15 Years. Deviation is allowed on the tenure after the scrutiny of the rental agreement and the Lesse profile.
• Loan amount - From 20 Lakhs to loan amount extending thousands of crores subject to income (Rental as well as other income), property Value and thus eligibility.
• Properties offered - Leased / Rented out Properties’ like Service Apartments, Paying Guest, Commercial Spaces, Office Spaces, Tech Parks, Industrial Facilities, Godowns, Warehouses Etc.
• Balance Transfer loans and Top-Ups loans can also be availed on the existing loan facilities.

At CANBAY CAPITAL we make sure that you get loans at the flexible terms at the most attractive interest rates with affordable EMI”S so that you can have fast access to cash, with a predictable, long-term repayment schedule, we tailor our loans to make sure that you meet your unique needs of your business, also helping you achieve your Personal and professional goals efficiently and effectively.

Lease Rental Discounting Loans (LRD) are provided for Resident and Non-Resident Indians with rental income like ;-

• Individuals:

  Salaried, self-employed (like traders, distributors, suppliers…etc) and professionals (like doctors, chartered and cost accountants, consultants...etc).

• Business / Non Individual Entities:

  Proprietorship, Partnership, Private ltd, Closely Held Public Ltd Companies, Approved Trusts, and Societies. Loans can also be offered to Firms and Companies against properties held by the Partners/Directors.

Lease Retnal Discounting Loans (LRD) is available for –

• Residential Accommodation Properties - Hotels, Service apartments, Paying Guest, Resorts..etc
• Commercial Properties - Land , Shops, Office Spaces, Shopping complexes and Malls, , Tech Parks.
• Industrial Property – Land, Manufacturing Facilities, warehouses ..etc
• Special Use properties and all other properties - Like Service Apartments, Paying Guest Buildings, Schools, Hospitals, Godowns. ..ETC
• Balance Transfer Loan - To transfer / restructure an existing loan under different terms / with different bank or financial institution
• Top Up Loan - Additional loan amount provided over and above the existing loan based on the value of the property. Top up loans are given over and above the existing home loan for personal or business use. The end use of top up loans is generally not monitored and can therefore be used for any legal activity such as marriage, higher education, vacation, buying artefacts, home furnishing, closure of other loans, etc.

The loan eligibility for LRD loans primarily depends on the income eligibility which is primarily decided by the amount of monthly rent the lessee (Tennent) pays to the lessor or owner of the property, the tenure or the time period the lessee intends to occupy the property and the profile of the Lesse. The other important factors being the locking period and the lease/rental renewal or extension clauses . All these factors put together becomes the deciding factors of the loan amount and the tenure of the loan thus together the amount of EMI.

The other important part is the property eligibility - The percentage of funding permitted on the market value of the selected property. Both of these are compared and lower of the two eligibility limits is sanctioned by the bank or financial institution.

The other factors that would decide the loan amount would be like the interest rate charged by the bank, Existing liabilities, or serviced loans/EMI s, CREDIT/CIBIL Score Etc.

For individual borrowers there can be max age restriction of 70 Year at the time of closure of the loan, else it totally depends on the rental tenure and the amount of rentals expected.

Apart from these, the general aspects of the applicants (Lessor) as well as the tenant/ lessee is almost equally scrutinised on credit/ financials and other aspects like CIBIL/CRILIC reports, history of repayment of loans and to an extent the business and financial strength.

PROPERTY Eligibility
LRD loans are provided against the Market Value of the Property as determined by the legal and technical department of the financier. The typical loan to property value (LTV) is between 40% - 80% of the valuation with tenure restriction based on the terms and conditions on which the rental agreement is executed.

The offered property must be:

• Registered in the name(s) of the applicants by way of a registered sale deed or by way of mandatory ownership documents.
• All necessary govt and statutory approvals with clear and marketable titles must be obtained.
• Approved by the financing institution’s legal and technical advisory panel.
• Within the approved geo limits of the bank or financial institution; the property must not be situated in any negative area.

Interest rates for LRD loans are very similar to those extended Mortgage Loans or Loan against property. Interest can be best negotiated depending on the applicant or the lesse profile as well and the amount of rental and the property value. Loans are offered for floating and fixed rates of interest on monthly or quarterly reducing terms.

The following are the indicative rates of interest for different types of mortgage loans:

Any loan availed needs to be repaid and that too with interest month on month. Loans are repaid in Equated Monthly Instalments (EMI), which includes principal and interest built into one single payment. EMIs are generally paid through online/electronically via standing instructions, from escrow accounts on preset dates depending on the date of deposit of the rental as per the Rental/Lease agreement.

Use our EMI calculator

Things to remember

• Banks and financial institutions apply interest rate as on date of disbursement of loan; this may be different from the rate mentioned in sanction letter.
• When interest rate on home loans increases, banks generally tend to increase the tenure of the loan while keeping the EMI same. In this scenario, the principal portion repaid from the EMI reduces as the interest outflow is more.
• Consider taking a floating rate of interest when the rates peak and fixed rates at times of lower interest rate.
• Consider the fees or charges applicable for change from floating to fixed and fixed to floating

Banks and Financial institutions generally ask documents of proof relating to identity, income, obligations, and property.

Proof of Identity -

Individuals - (PAN Card, Passport, Aadhaar Card, Voter’s ID Card, and Driving License)

Firm/Companies - GST registration, and other business registrations and documents like [partnership deeds, MOA AOA ..ETC

Proof of Income -

Salaried Profile – Payslips, Form 16’s, and Bank statements

Self-Employed Profile – Latest 2 to 3 Years of Income Tax Filing with Turnover Filings, Bank Statements ..etc.

Property-related Documents:

Current and Previous Sale Deeds, Previous Sale Agreements, allotment letters, Building Plan, Encumbrance Certificates, Property Tax Paid receipts, Estimate for the Cost of Construction, Depending on the transaction and property type

Download the complete List of documents as per your profile and property

Type of Loan : Home Loan, Mortgage Loan, working capital project loan

Profile : Salaried, Self Employed, Self Employed Professional, Partnership Firm, Company

Transaction Type : Resale, Builder sale/allotment, Govt/Housing Authority Allotment

Status : under construction/Yet to Start , Complete

Property : Residential, commercial, industrial, Land, Apartment/Flat, Villa, independent Bunglow/House

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One needs to account for bank and government fees while finalising a Mortgage Loan. The Primary fees Banks/Financial institutions charges for any loan application is processing fee. Apart from Bank’s Fees and charges and there are incidental charges incurred as well as govt fees and charges like stamp duty and registration fees which needs to paid towards execution of loan agreements, affidavits, indemnities and memorandum of deposit of title deed ..etc. The list of fees and charges are detailed below and it can differ from bank to bank and are subject to change at their sole discretion:

There are pre and post sanction fees and charges applicable while availing a home loan.

PRE-SANCTION- Login/application/Processing Fees (From Nill to 20,000 )

POST-SANCTION- Balance Processing/Administration Fees ( From 10,000 to 2.5 % of the Loan amount)

DISBURSEMENT – Loan Agreement and Documentation Stamp Duty, Incidental Charges, Mortgage deed execution Stamp Duty ( 0.5 % of Loan amount ), Mortgage Registration Fees, Insurance Premium, Other additional documentation execution charges and stamp duty Like Affidavits, Declarations ..etc .

Post-Disbursement: Pre- EMI, EMI, Other Charges as per the List Below.

Closure Charges: Closure charges are applicable for the loan closed and ranges from 0 to 4 %

• All charges will attract standard taxation like GST and Cess additionally.

Things to remember

• Make sure that you go through the charges and fees section of the home loan agreement and related documents.
• Make sure that the mentioned charges are filled in before your signature. If there is any deviation, ensure that it is explained by way of a separate correspondence from the bank / institution.

Note: All the applicable charges and fees for a loan is normally mentioned in the sanctioned letter, if not it will be mentioned in detail in the loan agreement and related documents that the bank sends you for signatures, so it’s very important and highly recommended that the applicants read the sanction letter as well as the fees and charges section with the most important terms & conditions sections of the loan documentation thoroughly. Any dispute and claims that will arise in the future will all be referred to these documents. Make sure that you go through the mentioned charges and clarify the same before your signatures.
Part or full wavier of the charges, as well as other deviations from standard terms and conditions are subject to approval from approving authority of the concerned bank/Financial institution. In case of such commitments from the bank/authority customers should make sure that it is communicated by way of a separate correspondence by email or letter from the concerned authority.

The list of fees and charges are detailed here is mentioned in a range as it can differ from one lender to the other and are subject to change at their sole discretion. Request you to read the below mentioned charges and details as an initial point of information and check the specifics while availing the loan.

Know all the detailed charges and fees. Expand the below table (Given as a separate document )

Loan amount disbursements are processed only on submission and acceptance of all documentation (which includes loan agreements, original property documents as prescribed by the lender, repayment/security cheques, affidavits, indemnities, in the prescribed formats and other related documents) as prescribed by the bank. Banks typically take 2-7 working days to process disbursements on submission of appropriate documents.

The beneficiary of the loan amount disbursement depends on the type and purpose of loan availed.

Mortgage loans are disbursed by way of pay orders (or demand drafts / bankers cheques) favouring the applicant / beneficiary or favouring the bank in case of balance transfer, clearly specifying the following:

• Registered mortgage if insisted by the bank/financial institution for security creation should be done before disbursement of the loan.
• Interest is charged on the loan amount from the day or date of disbursement.
• All sanction conditions mentioned in the sanction letter to be fulfilled or adhered before disbursement.
• Written consent by applicant is mandatory for all loan disbursements.

With our dedicated team of experts, we will make sure that you get the right financer as per your profile and the desired terms and conditions. we will also guide you in gathering and preparing the documents, while also ensuring a hassle-free completion of the entire loan process by timely follow-ups and coordination.

• Explore Your Options: Browse through our loan products and use our online calculators and tools to understand your need.
• Application: Gathering the required documents with a simple online /offline application form.
• Document Submission: Upload or submit the required documents for verification.
• Verification/Credit Appraisal – Legal and Valuation of the Property / Verify all the given documents for eligibility and other compliances. Personal Discussion.
• Personal Discussion a brief discussion with the approval team of the bank to understand the applicant’s profile and requirements Mutual clarification on any aspect can also be discussed .
• Approval: Loan approval based on eligibility and on verified documentation.
• Sanction Letter: Receive a sanction letter detailing the loan amount, tenure, interest rate, EMI and other terms and conditions.
• Documentation: Sign and Submit (Digital/Physical) loan agreements, original property, and other prescribed documents.
• Disbursement: Loan amount disbursed/credited to the beneficiary.
• EMI Payments – Payment of EMI/Pre-EMI starts till the loan closure.
• Loan Closure – Once the loan is closed the original Property Documents with a No Due Letter is returned back to the customer.

TURNAROUND TIME – Sanctions for salaried home loan can be processed within 2 to 5 days, whereas self-employed loans may take around 4 to 10 days for sanction. Post sanction process of disbursement of the loan amount may take anywhere between 2 to 5 days depending on the additional documents required, sanction conditions and other factors.

View/download in-depth process flow.

The security for a mortgage loan is generally the property for which the loan is provided. Mortgage loans are typically secured by way of registered mortgage wherein the loan amount is disbursed after the original property documents along with the registered memorandum of equity (or deed) are submitted to the bank or financial institution. The registration of the deed can attract stamp duty of up to 0.5% of the loan amount and applicable registration charges. These charges must be borne by the applicant. Once registered, or mortgaged, the encumbrance certificate of the property will reflect the financier’s name. Once the loan is repaid and closed, the original title documents and a release mortgage deed are handed over to the applicant along with a no objection / closure certificate.

The other, less popular way of holding security for a mortgage loan is equitable transfer wherein the borrowers submit all the prescribed original property documents with the lending institution who in turn returns them along with a no objection certificate or closure letter on complete closure of the loan.
Apart from the property that is financed, additional collateral in the form of liquid securities like shares or fixed deposits may be requested by the bank/financial institution depending on the loan type and risk coverage assessment.

*Please consult your chartered accountant or financial accountant for more information on tax implications with reference to your income and obligations. Request you to use the below write up as a basic or general information to taxation and not specific to your income.

There are no direct tax benefits that can be claimed by salaried applicants on their salary income for either interest or principal repayments. There can be benefits on any Additional income if accounted depending on the end use and accounting pattern.

Self-employed individuals can, however, deduct interest repayments from their gross income as expenses incurred during the financial year if the loan proceeds are used for business or related end use which allows for such deductions.

Given the risks and uncertainties our lives are fraught with, it is a good idea to obtain an insurance cover for the life of the borrowers as well as for the constructed building / home.

Though life insurance is optional, banks and financial institutions do insist on the same, whereas property insurance has been made mandatory by the governing body, nevertheless both are highly recommended.

Both life and home insurance cover or policies are available as part of the loan package. The premium can be added back to the loan amount and can be financed if the policy is taken as a package with the home loan.

Applicants can opt for three types of Insurance options.

1) Life Insurance: life insurance as single premium term polices are offered for the applicants against any eventuality of his or her Life because he being the breadwinner for the family. In the event of eventuality to the life of the applicant this policy will work as a shield against the burden of the loan by enabling repayment of outstanding loan liability and makes sure that the asset can still be enjoyed by the surviving members of the family as before.

The premium paid for the life insurance with the home loan is deductible under the section of income tax act 80(c) act..

2) Property Insurance or Home Insurance* is available against any damages caused for the building/structure and its contents* against any natural or man-made hazards or calamites. Any completed standard constructed property can be insured for a value not exceeding its reconstruction value. In case of damage to the property, only the reinstatement value – or the cost of reconstruction - is reimbursed to the applicant subject to the maximum insured amount; cost of land is nor insured nor reimbursed at any time of claim. Insurance cannot be done for market value as market value of any property includes land and other factors which determine the same.

3) Home Content Insurance is available against any damages caused for the contents and valuables against any natural or man-made hazards or calamites including theft or burglary. This policy can be taken to insure the contents of a home such as furniture, household appliances, jewellery and other valuables

NOTE :-

*Home insurance and home content insurance are two different types of policies and need to be taken separately as the one will not cover the other.

The home insurance and the home content insurance does not have any direct tax benefit for the premium paid under the income tax acts

The availability of property and life insurance depends from location to location depending on banks/Financial institution. Certain banks and financial institutions may provide both life insurance and property insurance at certain locations and may only provide either one of them at certain other locations.