You own a tenanted property and need a lump sum — for a renovation, a business push, a family milestone, or the down payment on the next property. Landlords typically reach for one of three instruments: a personal loan, a loan against property (LAP), or rent discounting (advance rent). They differ enormously in cost, speed and what's at stake.
Personal loan: fast but expensive
- Cost: typically 11–18% p.a. depending on your profile.
- Speed: fastest — often 24–72 hours, fully digital.
- Collateral: none, which is why the rate is high.
- Ticket size: usually capped at ₹25–40 lakh by income multiples.
- Best for: small, urgent needs unrelated to the property.
Loan against property: cheap but heavy
- Cost: typically 9–12% p.a. — the cheapest headline rate of the three.
- Speed: slowest — valuation, title search and legal checks take 2–4 weeks, plus processing and valuation fees.
- Collateral: your property is mortgaged; default puts the asset itself at risk.
- Ticket size: large — commonly 50–70% of property value.
- Best for: big-ticket, long-tenure needs where the paperwork is worth it.
Rent discounting / advance rent: the middle path
- Structure: an RBI-registered lender advances you 3–11 months of future rent in one payout; the tenant's monthly rent services it.
- Cost: a discounting fee on the advanced amount — typically well below personal-loan rates, because verified rental cash flow backs it.
- Speed: days, not weeks — verification is of the rent agreement and payment track record, not a property mortgage.
- Collateral: none. Your property is never mortgaged; only the rent receivable is assigned.
- Ticket size: matched to your actual rent roll, which keeps borrowing disciplined.
- Best for: needs that fit within a year's rent — renovation, education fees, a business opportunity, or bridging a property purchase.
The comparison that matters
Think of it as three questions. How much do you need? (More than a year's rent → LAP territory.) How fast? (This week → advance rent or personal loan.) What are you willing to risk? (A personal loan risks your credit score; LAP risks the property; rent discounting risks neither — it monetises income you had already earned but hadn't received.) For lump-sum needs that fit inside your annual rent roll, advance rent is usually the cheapest money you can access without pledging the asset.
What to check before signing any of them
- The all-in APR from the Key Fact Statement — never the flat rate in the ad.
- Foreclosure/prepayment charges if you want to close early.
- For rent discounting: what happens if the tenant vacates mid-tenure — replacement-tenant substitution or repayment schedule.
- That the lender is an RBI-registered bank or NBFC, with a named grievance officer.
Get 3–11 months of rent upfront with RentHatke's Advance Rent — no mortgage, online verification, payout direct to your bank account.
