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Money is always in short supply .Your needs are plenty. Your son will soon be in college and plans to do his MBA. Your daughter will be married soon. You just recovered from a medical condition. So how would you get the money for these expenses?
You want to avail a personal loan as you do not need to give any reason when you avail such a loan from the bank. These loan is also unsecured (No need for giving a collateral).But there is a problem. The personal loan has a high rate of interest. It comes at around 16-22% rate of interest. That is when your friend advises you to avail a loan against your property from the bank.
What is a loan against property?
The bank gives you a loan against 60-70% value of your property.(The collateral is your property).
This is a secured loan and charges you a lower rate of interest than most loans baring a home loan. The rate of interest charged is around 12-16%.
The tenure of the loan:
The loan against property comes with repayment tenure of around 10 years which can even be extended to 15 years in case you find making the repayments difficult.
It unlocks the value of your property:
Your property appreciates (increases in value) with time. If you reside on the property this increase in the value of the property does not benefit you. You can unlock the true potential of your property by availing a loan against it. If you avail a loan against your property when its value is high you can avail a huge quantum (amount) of loan.
The amount of loan you can avail:
You can get a higher quantum of loan by availing a loan against property than say a personal loan. This
loan is secured against your property and you can get say 60-70% of the value of the property. The bank has no worries as they have a security in case you default on your repayments.
The property continues to be in your name:
Your property is merely pledged and you continue to be the owner of the property. You can reside on the property or even rent it out and earn an income on the property. As long as all the owners give consent to take a loan against the property (if there is more than one owner) you can easily avail a loan against your property.
Your loan is sanctioned easily:
The bank sanctions your loan easily as they have collateral (security).All you need to do is to show the proof of income so that the bank is confident that you will make the repayments in time.
You have the refinance option:
The value of your property increases with time. In a particular year the value of your property may be INR 40 Lakhs. You get a loan against 60-70% of its value. A few years later the value of the property is INR 60 Lakhs. As the value of the property has increased you have the option of availing an additional amount of
loan against the same property using the refinance option.
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