Property
has always been and will always remain your biggest asset. Taking a loan
against property in case of emergencies is an age-old practice. Mortgaging
homes or properties for loans has been done even before banks existed. Even
today property is said to be the best investment and people have often use
their own homes as guarantees or as a mortgage.
Loan against property is preferred by many because this way you can get
a higher loan amount with the benefit of lower EMI. Mortgage interest rates are
also low and they also have longer repayment options.
Recently, Crisil
said in a note that the amount of loans taken against property is set to double
to Rs.5
trillion by 2019 and it is expected that the number will grow by 22% annually
in the next four years. There are also emerging signs of a build-up in risk as
competition intensifies, Crisil noted.
Mortgage
loan interest rates are low and they also have longer repayment options, this is
because when you have a property listed as collateral your loan provider has
greater assurance and hence they are willing to give you a higher amount as
loan. Your loan amount cannot be higher than the value of your property though.
When
it comes to loans for small amounts, like to fund your child’s higher education
or to buy a new car, people prefer to opt for a personal loan. However, personal loan interest rates are way
higher than those of loan against property. This is because in a personal loan
you do not have collateral with the bank. The difference between the interest
rates can rage anywhere from 4% to 5%, which can mean a lot of savings. The
tenure for a loan against property is also much longer than that of a personal
loan. Personal loans
are offered for a period of less than 5 years whereas loan against properties
are high-value secured loans that can be paid off in up to 10 to 15 years.
When you opt for loan against property you can also ask for a higher amount
of loan. The loan amount is based on the valuation of the property that you’re
mortgaging. The loan against property eligibility criteria is also less
stringent than that of personal loans. You can opt for this loan to fund a new
home, a new car or even an education.
With low interest rates, longer tenures and higher loan amounts a loan
against property is your best bet for a loan.
