Loan Against Rent Agreement

Loan Against Rent Agreement

Posted by Creditkaro

Personal Loan December 27, 2019

The 21st century has seen a major rise in investments on real estate. The property prices around the country has seen a huge rise because of industrialization on a large scale around the country.

Also read: Personal Loan v/s LAP

Today, real estate has become one of the most reliable form of investment, but the thing with real estate is that it is a form of illiquid asset, so people generally like to wait for prices to rise and lent it out on rent. Very less people know that you can also acquire funds against your rented property’s security.


 If you have a residential/commercial property which is on rent for a certain amount of money, then you are eligible to avail a loan against the rental agreement. The loan offer is applicable for both single and joint owners but in case of joint ownership the co-owners will have to stand as co-applicants to the loan.

The loan will only be available on a property which has already been let out on rent or lease for which a rent agreement has been made.


Loan options like Home loan, Education loan, car loan can only be availed for the specific purpose, like if you avail a home loan then you can use the money only to buy a house or a plot or in case of a car loan you need to buy a 4-wheeler .

Now, Loan against rental agreement functions like a personal loan and offers the borrower the flexibility to use the loan money for any purpose that he/she may deem fit. A borrower can use it for a wedding, an abroad trip, or a down payment.


The quantum of loan that can be availed through loan against rent agreement is more than any personal loan as it is based on the rent of a property and the current market value of the property.

 The loan against rent agreement comes at lower rate of interest as it is a secured loan unlike personal loan which is an unsecured loan and hence carries a higher rate of interest.

Unlike personal loan which has a shorter tenure of about 5 years, loan against rent agreement carries long tenures of 10-12 years.

Paying back the loan amount is easier in case of loan against rent agreement as the borrower is still earning the rent from the property which can take care of the EMIs.

Once you complete the documentation and the bank officials are satisfied, loan against rent agreement is a very smooth and seamless process.


In order to avail loan against rent agreement, you need to present the following documents:

  • Loan application form
  • Identity proof
  • Residential proof
  • Passport size photograph
  • Property related documents
  • Title of ownership
  • Latest 6 months bank statement/ last 3 years profit/loss statement and balance sheet
  • Form 16/ITR or last 3 years income tax returns
  • Educational qualification, last 3 months salary slip/proof of business existence
  • Processing fee cheque
  • Approved building plan/sanction


  • The property owned by the borrower should have already been let out and must be earning rent
  • The property let out must have a confirmed rental agreement between the owner and the tenants
  • The property in question must be approved by the respective government authority
  • The owner of the property must prove his/her creditworthiness as per the bank’s standards
    Loan against rent agreement is one of the safest options, in case you are looking for a loan, and has been in the trend for quite some time now. In case you want to apply personal loan online , just visit our website and go to the personal loan page by clicking on the personal loan tab.

Till then… happy buying!