If you have rented out a property to an individual or a company, it can come handy during an emergency. You can get a loan against the rent you are yet to receive in the future from your tenant. Such a loan would be cheaper than a personal loan and your tenant will pay the equated monthly instalments on your behalf. While most banks provide loans against rent receivables only if property is rented out to reputed firms and banks, some banks such as Indian Overseas Bank and UCO Bank provide a loan even if the premise is rented out to individuals.
How much do they provide? Banks provide loans in the range of `50,000 to a few crores. The amount you can avail depends upon the quantum of future rental income that you would receive in keeping with the tenor of the lease.
Repayment tenor: This could be as high as 10 years depending on the lease tenor as well as your repaying capacity.
The cost: The rate of interest varies between banks but in general it is 50-100 basis points less than that charged on personal loans. You also need to pay a processing fees which again varies from bank to bank and depends on the loan amount.
Normally, a bank enters into a tripartite agreement with you and your tenant, whereby the tenant agrees to pay the rent directly to the bank. The bank also signs a separate term-loan agreement with you. You would be required to submit a few documents including the tenancy agreement, authorised building plan, title deed of the property, your bank statements , I-T returns and PAN number.