Lease Rental Discounting (LRD): A Smart Financing Solution for Property Owners

Owning a property is a great asset, but what if you could use its future rental income to secure a loan without selling it? That’s exactly what Lease Rental Discounting (LRD) offers. Whether you’re a business owner looking for funds, an investor seeking liquidity, or simply need financial support, LRD can be a game-changer.

At Magma Capitals, we specialize in helping property owners unlock the full potential of their assets through Lease Rental Discounting loans. In this guide, we’ll break down everything you need to know about LRD—how it works, its benefits, eligibility, and why it’s a powerful tool for financial growth.

What is Lease Rental Discounting (LRD)?

Lease Rental Discounting (LRD) is a type of loan where property owners can borrow money against their future rental income. The property remains in your name, but your rental earnings act as collateral. Financial institutions evaluate the lease agreement and tenant profile before sanctioning the loan, ensuring a steady repayment structure.

For example, if you own a commercial property rented to a multinational company for ₹2 lakh per month, a bank may offer you a loan based on the discounted value of this rental income over the lease period.

money, profit, finance, business, return, yield, financial, cash, currency, investment, banking, wealth, coin, economy, success, loan, salary, rich, credit, payment, savings, save, deposit, growth, income

How Does LRD Work?

  • You Own a Property – Residential or commercial, leased to a tenant.
  • Rental Income as Security – The bank or NBFC assesses your rental earnings.
  • Loan Amount Calculation – Based on the discounted value of rent receivables.
  • Loan Approval & Disbursement – Funds are credited to your account.
  • Repayment – Paid through EMIs, often adjusted against rental income.

Key Features of Lease Rental Discounting

  • High Loan Amounts – Get up to 75%-80% of the rental income’s net present value.
  • Competitive Interest Rates – Generally between 8% to 14%, depending on the lender.
  • Flexible Repayment – Tenure aligned with lease agreements, typically up to 15 years.
  • Ownership Retention – Your property remains yours, while you access funds.
  • Tax Benefits – Interest payments may be tax-deductible under Section 24(b) of the Income Tax Act.
  • Use Funds as Needed – Utilize the loan for business expansion, debt consolidation, or personal needs.

Why Choose Lease Rental Discounting?

1. Instant Liquidity Without Selling Property

Selling an asset for quick cash is often not the best move. With LRD, you retain ownership while accessing funds, allowing you to benefit from property appreciation over time.

2. Ideal for Business Expansion

If you’re a business owner needing capital for expansion, working capital, or investments, LRD offers an easier and faster alternative to traditional business loans.

3. Predictable Repayment Structure

Since the rental income is pre-defined, lenders offer structured low-risk repayment plans, ensuring financial stability.

4. Higher Loan Amounts Compared to Traditional Loans

As the loan is based on a secured rental income source, lenders are willing to offer higher loan amounts compared to unsecured loans or standard property loans.

Who is Eligible for Lease Rental Discounting?

If you own a rented-out property in India, you might qualify for an LRD loan. The basic eligibility criteria include:

  • Property Ownership – Must be a commercial or residential property leased to a reputable tenant.
  • Consistent Rental Income – A stable tenant with a long-term lease (preferably 5+ years).
  • Creditworthiness – A CIBIL score of 725+ increases approval chances.
  • Tenant Profile – Tenants such as corporates, banks, government offices, or MNCs are preferred.
  • Property Location – Properties in metro cities and tier-1 urban areas have better eligibility.
money, finance, mortgage, loan, real-estate, business, success, exchange, financial, cash, currency, bank, investment, banking, wealth, coin, economy, profit, salary, rich, credit, payment, savings, deposit, growth, income, accounting, money, money, money, money, money, finance, business

How to Apply for Lease Rental Discounting?

Step 1: Check Eligibility

Ensure your property has an active lease and generates consistent rental income.

Step 2: Gather Documents

Common documents required include:

  • Property ownership proof
  • Lease agreement with tenant details
  • KYC documents (PAN, Aadhaar, etc.)
  • Bank statements & financial history

Step 3: Choose the Right Lender

Compare banks and NBFCs to find the best interest rates and loan terms. Magma Capitals can help you navigate this process.

Step 4: Loan Approval & Disbursement

Once approved, funds are transferred directly to your account for immediate use.

LRD vs. Traditional Loans: What’s the Difference?

FeatureLease Rental DiscountingTraditional Loans
CollateralRental Income + PropertyProperty or Other Assets
Loan AmountHigher (Up to 80% of rental income value)Lower due to stricter criteria
Interest RateLower (8-14%)Higher (10-18%)
Repayment TenureAligned with lease periodFixed tenure
OwnershipRetainedMay require additional collateral

Things to Keep in Mind Before Opting for LRD

  • Tenant Stability Matters – If your tenant vacates early, loan repayment can become challenging.
  • Market Risks Exist – Property valuation fluctuations can impact the loan terms.
  • Prepayment Charges – Some lenders impose penalties on early loan repayments.
  • Choose the Right Lender – Compare terms before committing to ensure maximum benefits.

Why Choose Magma Capitals for Your LRD Needs?

At Magma Capitals, we understand the importance of financial flexibility. Our team of expert financial advisors ensures you get the best deal on Lease Rental Discounting loans. Here’s why we stand out:

✅ Tailored Loan Solutions – We analyze your property and financial needs to offer customized LRD options.

✅ Lowest Interest Rates – We compare multiple lenders to secure the most competitive rates for you.

✅ Hassle-Free Processing – End-to-end assistance, from documentation to loan approval.

✅ Trusted by Clients – Years of experience in providing smart financial solutions for individuals and businesses.

Final Thoughts: Is LRD Right for You?

If you own a rented-out property and need funds without selling it, Lease Rental Discounting is a great option. It offers instant liquidity, flexible repayments, and tax benefits while ensuring property ownership.

Looking for expert financial guidance? Magma Capitals can help you navigate the LRD process with ease.

Get A Quote
Get A Quote