Turn Your Running Lease Into Cash In Hand

They're built on the same idea — a loan against future rent — but LRD is generally used for larger deals on commercial property leased to strong corporate tenants, while LARR is the name several banks use for a similar, often smaller-ticket facility available to individual landlords and smaller lessors.

You remain liable for the EMI regardless of occupancy. Most lenders require you to either re-lease the property to an approved tenant quickly or service the loan from other income until a new tenant is in place — this is why lenders prefer long, stable leases upfront.

Yes, most lenders allow part-prepayment and foreclosure, though a floating-rate individual borrower usually pays no prepayment penalty while a corporate borrower or fixed-rate loan may attract a foreclosure charge — check the sanction letter for specifics.

For most LRD deals, yes. The lender wants the tenant's rent routed directly into an escrow account it controls so the EMI is captured before any surplus reaches the borrower. Some smaller LARR facilities may instead just require proof of rent credits into your regular account.

Most LRD/LARR products are built around commercial leases — shops, offices, warehouses, schools, hotels. A few lenders extend a similar structure against long-term residential leases to corporate tenants (e.g. company-leased staff housing), but pure individual-to-individual residential rent is usually not eligible.

It's whichever is lower of two caps: the Loan-to-Value cap (typically 60–75% of the property's market value) and the DSCR cap (your net rent must cover the resulting EMI by roughly 1.2x–1.5x). A stronger tenant and a longer residual lease usually push the eligible amount up.

Expect a processing fee (roughly 0.5–1% of the loan amount), valuation and legal fees at sanction, stamp duty on the mortgage and tripartite agreement, and possibly a foreclosure charge depending on the borrower type and whether the rate is fixed or floating.