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Personal loans are the go-to financing solution for Indians when they are in need of extra funds. One of the benefits of these loans is that you can use them for any objective.

Some use it in their business while others to add a new floor to their house; some avail these loans for higher education while others for medical situations. A handful also takes personal loans to improve their credit score.

One of the mandatory requirements of personal loans is a high credit score of 750, if you may not have an ideal score than you should know the tips how to increase the cibil score for getting the loan easier. Also, you may need a higher amount that lenders may not sanction with a personal loan.

In such cases, a loan against property is the alternative option that financial institutions have for you.

What are Loans Against Property? 

home loan

Loans against property are a secured loan, unlike personal loans. You have to mortgage property to avail such a credit. The documents of the property remain with the lender until you have repaid the loan in full.

One of the conditions of loans against property is that the financial institution will seize the mortgage and liquidate it if you default on the payment. There are various ways to ensure you don’t default on the loan.

However, you don’t need a credit score of 750 to apply for a loan against property in India.

What Are The Advantages Of Loans Against Property?

  1. High Loan Amount

You can only avail loan amounts around Rs. 30 Lakh with a personal loan. On the other hand, loans against property can offer up to Rs. 3.5 Crore.

The amount that you avail depends upon the market value of your house. Lenders can sanction a loan up to 80% of even more of your property price.

  1. Longer Repayment Tenure

personal loan EMI calculator

Loan against property tenure can go up to 20 years or more as it is a high-value loan. Contrarily, a personal loan can give you a maximum tenure of 60 months.

The benefit of longer tenure is affordable EMIs. However, do note that the cost of the loan (principal + interest) increases with tenure.

For instance, say you have availed a mortgage loan of Rs. 50 Lakh at 11% rate of interest. The EMI and cost of loan for two tenure include:

  • 20 years – EMIs will be around Rs. 51,000 and the cost of loan Rs. 1.2 Crore.
  • 15 years – EMI will be around Rs. 56,000 and the cost of loan Rs. 1 Crore.

Use a loan EMI calculator to determine the monthly instalments based on the tenure.

  1. Lower Rate of Interest

A significant benefit of loans against property is the comparatively lower rate of interest than personal loans.

  1. No Charges when Foreclosing or Part-Prepaying

Another lucrative loan against property features offered by top lenders such as Bajaj Finserv is zero charges when you foreclose or part-prepay it. Foreclosing is closing the loan in full before the tenure ends while part-prepaying is paying a large portion of it to reduce the EMI or tenure.

On the other hand, you will incur additional charges when foreclosing or part-prepaying a personal loan.

Bajaj Finserv is an NBFC that offers Loans Against Property with no charges when part-prepaying or foreclosing.

They also provide pre-approved offers that minimise the time taken to avail financing by making the process straightforward. Pre-approved offers are available on mortgage loans like home loans, unsecured loans like personal loans and business loans along with several other financial products.

  1. Balance Transfer Facility

A balance transfer facility enables you to transfer the remaining balance of an existing loan to another lender for a more affordable rate of interest. Some financial institution also provides a high-value top-up loan when you opt for a loan balance transfer. The loan against property documents required is also minimal when you apply for this facility.

These were some of the reasons you can consider loans against property over personal loans. Make sure to fulfil all the loan against property eligibility criteria. Also, know how a loan against  can help you consolidate existing debts if you have any. Utilise the value your property today to benefit from it throughout the future.


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Sarah Anna

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