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Loan against Rent Receivable – All you need to know

  • 04-Apr-2022
Loan against Rent Receivable – All you need to know

What is a loan against rent receivables? 

A loan against rent receivable is provided by all the public and private banks for managing future rent on an owned property as collateral. It is a kind of a personal loan,it can be used for boosting the condition of taking up new projects, helping in business activity, expenses related to marriage or education, repair or renovation, etc. This loan can be provided to anyone who has any type of property that has been issued on a commercial basis. 

The Interest rate on loans against rent receivable 

Interest rate  @8.75% onwards 
Loan amount  From 25 lakhs to 200 crores. 
Processing fee  Up to 1% 

 Interest rate and processing fees by banks in India 

Bank name  Interest rate  Processing fee 
State bank of India 10.70% 1% 
Union bank of India 9.80% 1% 
Yes Bank Ltd. 8.00% 1% 
RBL Bank Ltd. 8.50% 1% 
Standard Chartered bank 7.50% 1% 
South Indian Bank Ltd. 10.70% 1% 
United bank of India 10.75% 1% 
UCO Bank 9.40% 1% 
Central bank of India 10.10% 1% 
HSBC Bank 7.50% 1% 
HDFC Bank Ltd. 7.25% 1% 
Bank of India 8.35% 1% 
Bandhan Bank Ltd. 10.00% 1% 
Bank of Baroda 8.00% 1% 
Axis Bank Ltd. 7.50% 1% 
Canara bank 11.50% 1% 
Citi bank 7.20% 1% 
ICICI Bank Ltd. 7.75% 1% 
Kotak Mahindra bank 7.25% 1% 
Indian bank 8.80% 1% 
IndusInd bank 9.00% 1% 
IDFC First Bank  9.50% 1% 
Indiabulls  9.50% 1% 
Digibank (DBS) 9.00% 1% 
Edelweiss Finance  10.00% 1% 
Pnb housing  9.00% 1% 
LIC Housing Finance  8.00% 1% 
Punjab National Bank 8.70% 1% 

 Benefits of loan against rent receivables 

Low-interest rate: - The interest rate on loans against rent receivables is generally low as it is a secured loan. The rate of interest differs from bank to bank and it helps you to compare and choose the best deals. 

Flexible tenure: - Banks and NBFCs offered freedom of flexibility usage, as it has a longer repayment tenure of up to 8 to 10 years. 

Speedy approval: - It has a faster approval of the loan, as it is given against the amount of rent as collateral, so the justification is done to be less. 

Less documentation: - Loan against rent receivables requires less documentation as the process is totally online. 

Maximum property value: - The borrower can get a loan amount of up to 60% to 85% of the property value as the maximum loan amount. 

Loan amount: - The amount of the loan is based on the market value of the property value. 

Documents required for loan against rent receivables 

  • 2 passport-sized photographs
  • Aadhar card and PAN Card
  • Copy of PAN Card
  • Income Tax Return with computation of income if filed for previous 3 years form – 16.
  • Bank statement of last 1 year – salary account.
  • Sanction letter and loan scheduled (if running).
  • A cheque for processing fee in favor of the bank.
  • Permanent address proof and also needed if rented.
  • Appointment letter and salary slip for the previous 3 years.
  • Complete property documentation with Chain and ATS + MAP.

Eligibility criteria for loan against rent receivable 

Eligibility depends on various factors such as sales or business turnover, age of an applicant, creditworthiness, repayment history, total work experience, etc.  

  • The minimum age limit is 24 years and the maximum is 60 years of age.
  • Property should be built under the following authority guidelines of the local government.
  • An agreement of lease or rent should be made properly.
  • The commercial property of the borrower should be receiving regular rent and renting out.
  • The minimum loan amount an applicant can get is Rs. 25 lakhs and the maximum are Rs. 200 crores.

Factors affecting the eligibility of loans against rent receivable 

Less income: - The income of the borrower illustrates their capacity for repayment. If the borrower has any existing loan, then the liability of the income ratio will be evaluated by the banks to see whether the borrower has the ability to repay another loan. 

Borrower's age: - If the age of the borrower is between 25 to 30 years, then he has enough time to repay the loan as their days of working are longer, and if the age of the borrower is nearest to the age of retirement, then he has fewer working days and eligibility become less to pay back the amount of the loan. 

Financeseva allows you to choose and compare the best deals offered by tops banks for loans against rent receivable.

Also read: - 5 Things You Should Know Before Apply for a Loan Against Property

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