Turn a signed lease into capital today.
LRD lends against the rent your property will earn, not against what the property is worth. A registered lease with a creditworthy tenant becomes a bankable cash flow — discounted to a lump sum, with rent routed to the lender to service the loan.
How the loan is actually sized
The lender takes your net monthly rent, applies the portion it is willing to earmark for servicing — typically 70–90% — and works backwards to the loan amount that this instalment would support over the lease term at the offered rate. Property value acts as a ceiling, not as the basis.
Because the rent stream is the primary security, the tenant's credit standing drives the pricing. A registered lease with a listed company, a bank, a large IT services firm or a government body attracts the sharpest rates in commercial property lending — often below what the same owner could obtain on a conventional mortgage. A lease with an unrated small business does not.
The mechanics matter as much as the numbers. Rent is directed into an escrow account under the lender's control, the lease is assigned to the lender, and the tenant acknowledges that arrangement. Where a tenant refuses to acknowledge the assignment, the structure weakens and pricing moves against you.
Tenure is bounded by the lease, not by your preference. Where a lease has seven years to run, most lenders will not go materially beyond that unless renewal is contractually provided for — which is why a long lock-in with a renewal option is worth negotiating with the tenant before you approach a lender.
Indicative pricing in 2026
LRD is priced almost entirely off tenant quality. The bands below assume a registered lease with rent escrowed to the lender.
Public Sector Banks
Tier-1 Private Banks
NBFCs & HFCs
Where LRD structures go wrong
Lease shorter than the loan
The obvious risk is the one most often glossed over. If the lease has five years left and the loan runs twelve, seven years of repayment depend on a tenant who has not committed to stay. Lenders manage this with a shorter tenure, a lower advance rate, or a debt service reserve — all of which cost you. Renew or extend the lease first.
Rent quoted gross, serviced net
Property tax, maintenance, society charges and TDS all sit between the rent on the lease and the rent available to service debt. Lenders compute on net rent, so a file built on the gross figure comes back 15–25% smaller than the owner expected.
A single tenant carrying the whole facility
One tenant in one building is a concentration risk, and credit teams price it. Multiple tenants with staggered lease expiries support a larger and better-priced facility than a single occupier of the same total rent, because vacancy is not an all-or-nothing event.
Documents required
Incomplete files cause most multi-week delays. We assemble the full set upfront, in the order credit teams read it.
KYC & constitution
- PAN & Aadhaar of all promoters / partners / directors
- Certificate of incorporation, MOA-AOA or partnership deed
- Board resolution or partners' authority letter
- GST registration & trade licence
Financials
- 3 years ITR with computation of income
- Audited balance sheet, P&L and schedules
- 12 months' bank statements of all operating accounts
- GST returns (GSTR-3B) for the last 12 months
- Existing loan sanction letters & repayment track record
Lease & property
- Registered lease deed with all annexures and escalation schedule
- Rent receipts and 12–24 months' bank credits showing rent received
- Tenant's constitution documents, financials or credit rating
- Property title chain, EC, sanctioned plan & occupancy certificate
- Property tax receipts and society no-dues certificate
- Escrow account mandate and tenant acknowledgement letter
Related facilities & deep-dive guides
Every facility below is placed through the same 80+ lender panel. The long-form guides carry the working numbers, worked examples and lender-by-lender detail.
Frequently Asked Questions
The questions our advisory desk is asked most often about Lease Rental Discounting.
The lender takes net monthly rent, earmarks 70–90% of it for servicing, and derives the loan that this instalment supports over the lease term at the quoted rate. Property value only caps the result.
So a higher rent or a longer committed lease raises your sanction, while a shorter lock-in reduces it even if the property is worth a great deal.
In practice yes. Rent is routed into an escrow account controlled by the lender and the lease is assigned as security, so the tenant is asked to acknowledge the arrangement and redirect payments.
Most institutional tenants handle this routinely. Where a tenant refuses, the structure is weaker and lenders respond with tighter pricing or a lower advance rate.
Frequently, yes — where the tenant is strong. The lender is looking at a contracted cash flow from a creditworthy payer rather than at your business risk, which is a lower-risk exposure and priced as one.
With an unrated small-business tenant the advantage narrows or disappears, and a conventional commercial mortgage may serve you better.
You remain liable for the EMI. Most LRD sanctions require you to find a replacement tenant within a defined window and may require a debt service reserve equal to three to six months' instalments to bridge a vacancy.
This is the central risk in LRD and it is worth negotiating the vacancy provisions carefully at sanction rather than discovering them in a notice.
Some lenders will, but appetite is much thinner. Residential leases are short, rarely registered, carry no lock-in and often no escalation — none of which supports a long-tenure facility.
LRD is designed for commercial leases. For a let residential property, a loan against property is usually the more practical route.
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