Loan Against Property (LAP) vs Lease Rental Discounting (LRD) calculator
If you own an office, retail showroom, warehouse or industrial building leased to a credible corporate tenant, you can borrow against it either via a standard Loan Against Property (LAP — assessed on your business ITR and capped at 55% to 65% LTV) or via Lease Rental Discounting (LRD — assessed on the tenant's registered lease cash flow put into a tripartite escrow account, up to 70% to 75% LTV). Because LRD is self-liquidating from rent, banks price LRD 1.00% to 1.75% p.a. cheaper than LAP.
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How this is calculated
Net Rent = Gross Rent × (1 − TDS %)
LRD Sanction = min(PV of [Net Rent × Cover %] at LRD Rate over Lease Tenure, Property Value × LRD LTV %)
LAP Sanction = Property Value × LAP LTV %
- LRD Sizing: Discounts the permissible monthly rental EMI (
Net Rent × Cover %) over the unexpired lease tenure at the LRD interest rate, and caps the result at the LRD LTV ceiling. - Monthly Escrow Surplus: Shows how much net rental cash flow remains for the property owner each month after the bank sweeps the EMI.
- Equal-Principal Interest Comparison: Compares total interest outgo on an identical principal amount (`min(LRD, LAP)`) over the same tenure so you can isolate the pure interest-rate savings of LRD.
Not a credit decision or tax/legal opinion. Figures are indicative and based on your inputs; confirm final sanction terms, tax applicability and statutory notifications with your lender, insurer or Chartered Accountant.
Questions people ask
Why does LRD carry a lower interest rate than LAP on the same property?
Under LRD, the corporate tenant remits monthly rent directly into a tripartite escrow account with the lending bank, and the bank deducts the EMI before releasing any surplus to the landlord. This direct cash-flow ring-fencing lowers credit risk by 1.00% to 1.75% p.a. compared to LAP.
How is LRD loan eligibility calculated?
Banks take the monthly gross rent, deduct 10% TDS under Section 194-I (plus any property tax/maintenance borne by the owner), apply a rental coverage ratio of 80% to 90% as maximum permissible EMI, and discount that EMI over the unexpired registered lease tenure — capped at 70% to 75% of the property's market valuation.
When is LAP better than LRD?
LAP is preferred when the property is self-occupied, leased to multiple small tenants without long registered lock-ins, or when the remaining lease tenure is short (e.g. 2–3 years) and you want a 12 to 15 year repayment horizon based on your business income.
Own a leased commercial, retail or warehouse property?
We structure LRD and commercial LAP facilities from ₹1 crore to ₹100 crore with high LTV, competitive rates and smooth escrow setup.
LRD sanction is capped at the remaining registered lease / lock-in tenure and depends on lessee credit profile and tripartite escrow terms. Lenders, regulators and government offices apply their own rules and may round or calculate differently; their figures prevail. Biz Corp Solutions arranges funding through partner banks, NBFCs and financial institutions, and lenders decide sanction, rates and terms. Last reviewed 23 October 2026.