Benefits of Applying for Lease Rental Discounting

Did you know you can generate funds from your residential or commercial property? Your property will not only get you rental income on a monthly basis but the rent receivable will also help you yield more benefits in terms of funds.

Lease rental discounting is a type of term loan that you can raise against the rental income of your commercial or residential property. The funding you obtain from the loan can be used for personal as well as business purposes. This type of term loan is approved against the current market value and discounted rentals of the property.

In this case, the loan agreement is made between the lessee, lesser and the lending institute. The lesser doesn’t collect the rent because the amount gets credited on a monthly basis to the lending institution through an escrow account. The current occupant or the lessee is required to deposit the rent in the escrow account directly.

So, if you are looking for a short term loan for personal or business needs, lease rental discounting is the best option to look out for. Just make sure your property has a registered agreement between you and the lessee before you approach a lending institution.

Here are few points that you need to know about this type of loan:

• For collateral, you need to present a residential or commercial property that is on lease
• This loan can be taken for a tenure of up to 9 years
• You cannot obtain more than 70% of the property value as loan amount
• You can get the funds at an attractive interest rate, if you negotiate

Whether you are applying for a lease rental discounting loan or you need loan against property, make sure you are choosing a reliable and established lender.

All You Need to Know About Commercial Mortgage

Looking for ways to expand your business? There are several commercial mortgage options that you can choose from. This type of mortgage will give business finance that can be used for moving, expanding or improving your company premises. With the loan amount, you can plan business development in an affordable way. Just remember, if you don’t keep up repayments on your mortgage, your property may be repossessed.

This type of loan is secured by commercial property such as, office building, shopping center or an apartment complex. Typically, the proceeds from this mortgage are used for acquiring, redeveloping or refinancing commercial property.

If you are applying, you will have to ensure that your trading history is good. Lending institutions are very particular about the trading history of the borrower. They wish to know if the borrower can afford the mortgage and even repay it.

How much money you will get as loan will be determined on the basis of loan to value (LTV) and the debit service coverage ratios. You can choose fixed rate or floating rate of interest for this type of loan. Underwriting factors as well as market interest rates affect the rate of interest generally quoted on a certain commercial real estate. Compared to residential mortgages, commercial mortgage interest rates are higher.

Generally, this type of loan can be taken for a term of five to ten years for stabilized commercial properties that have an established cash flow. Whereas, for properties in transition such as, newly opened properties or a property undergoing renovation, the term of this type of loan is between one and three years.

Be it a home loan or commercial loan, find out all details such as, documentation requirements or factors like home loan balance transfer and fees before choosing a lender.

How top up loans work

A top-up loan is the add-on loan that one gets above their home loan. It allows you to avail an amount of money on your home loan when you need some extra funds on an urgent basis. This loan is an additional loan given to you by the bank on top of your home loan. A top-up loan is usually offered after a few years of taking a home loan.

How a top up loan works?

A top up loan allows you to get an extra loan on top of your existing home loan. The top up loan on home loan gives you the privilege of taking an additional loan on the home loan you have already taken. This top-up loan is granted only if you have an impeccable loan repayment track. 

Are you eligible for a top-up loan on your home loan?

You can only get a top up loan if you have a home loan on which you can top it up. The home loan providers in Mumbai, which are the banks, might provide you top up loans on your home loan. And if not, you can transfer your home loan to another bank that offers top up on the current home loan. Though the terms and conditions of each bank vary, there is a need to wait for a period and clear some of the home loan amounts to take a top up loan. 

What would be your tax benefits?

Tax benefits on top up loans are determined by the reason for which the loan is taken. The tax deductions on home loans are based on the interest rates. So if you’re paying EMIs for your home loans, the interest component for this EMI can be claimed for deduction. You can also claim a deduction for the principal too.