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For What Purposes Can I Use My Loan Against Property

By Finserv MARKETS - Aug 21,2019
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For What Purposes Can I Use My Loan Against Property

You can use self-owned property –be it residential or commercial – as security pledged to the bank to avail money. The money you get can be used to meet many financial obligations. Your loan against property with an average rate of interest of 10% can help you in:

  • Financing Higher Education/Foreign University Admissions

  • Footing Bills of Long-term & Expensive Medical Treatment

  • Paying for a Mega Wedding Extravaganza

  • Any New Blockbuster Investment

  • Mortgage buyout, loan transfers & debt consolidation

  • Going on a world tour

Higher Education:

When Diwakar’s daughter got admission into Stanford University in the US, the Central Government revenue official was proud but worried. The first year fee was Rs 55 lakh and there was no scholarship to fall back on. Luckily, he had an ancestral kothi in his name in Chandni Chowk worth over Rs one crore which was insured. So he easily got a personal loan against property to educate her.

You too can leverage your real estate asset to get funds to back higher education. Start an interest rate comparison on loan against property and discover flexible repayment, part and prepayment options. Go online to Finserv MARKETS to check eligibility.

Medical Expenditure:

Sridevi who worked in an ad agency in Ahmedabad met with a bad accident on her two-wheeler. The plastic surgery for facial reconstruction, skin grafts, micro-surgery and physiotherapy treatments came like a bolt from the blue. Her husband decided to take a loan against property and pledged his Ghatlodia flat when he realised the medical insurance policy did not cover the treatment line needed.

Your 2 BHK in a prime location can provide a comfortable back-up if your life takes an untoward turn. Do not hesitate to gain mileage on self-occupied property as it can command 60% of the property value as the loan against property for salaried individuals. There are different types of properties against which loan against property can be obtained.

Wedding Event:

Bank manager Mr. Chadda finally found an MBBS match for his daughter Simran. They had just attended Mamaji’s daughter Babli’s shaadi in Ludhiana where the floral chandeliers stole the show. Mrs. Chadda wanted a lotus shaped-mandap. After an interest rate comparison on loan against property, they decided to take a 5-year tenure loan with their Zakirpur shop as collateral to fund the gala celebration.

If you want financing for a grand wedding, you should ensure you have a clear title of the property, a steady salary and a good CIBIL score (that measures creditworthiness and repayment history) as loan repayments can be done over 15-year tenures. Check monthly outgo with the loan against property EMI calculator on Finserv MARKETS and make sure you do not turn defaulter.

Study findings (see graphic) of borrower data by Transunion TU Cibil has revealed that LAP has beaten auto loans, home loans, personal loans and credit cards till September 2018. LAP showed a 33% increase in accounts, while credit cards posted a 32% growth rate. However, LAP also showed more delinquency rate compared to other credit segments. Defaults rose 73 basis points (100bps = 1 percentage point) year-over-year to 3.03% in the quarter ended September 2018.

For What Purposes Can I Use My Loan Against Property

Mortgage Buyout/Balance Transfer of Loan/New Investment/Business Need:

The Khanna brothers in Mumbai had invested in real estate jointly. When the younger one decided to move to Australia, Khanna senior, a stock analyst, offered to pay up half the value of their 2 bedroom flat and become full owner. He knew a loan against property was a secured credit instrument and the Dombivli East property was a legal asset to secure a medium-sized loan at his bank. Later, he took a top-up to start an online investment portal.

When you need to consolidate your asset by paying up a co-owner or consolidate your debts scattered across different accounts, try a mortgage buyout or balance transfer of loan through a loan against property. If you need it to finance an under-construction property, make sure it is coupled with a lucid amortization schedule that keeps you updated on your loan reduction after EMI payments as floating interest rates change.

World Tour:

Senthil, a mechanical engineer in Chennai and his wife, were planning a summer vacation with their teenage sons. A world tour was particularly enticing and the itinerary looked manageable for both sets of grandparents too! With his father as co-applicant, Senthil took a loan against their house in Ambattur to make the dream trip happen.

When age is on your side and opportunity to travel knocks on the door, grab it with both hands, especially if you can take along near and dear ones. Use an online loan against property EMI calculator and increase your EMIs when your financial status is comfortable. Even that can be done online.

While the above are conventional uses of a loan against property, rest assured that banks and non-banking financial companies will hear you out on your reason too. However there is due diligence on the legality of property, clear title and ownership; sharp appraisal of your salary, ability to repay, age, other liabilities and credit history; and a detailed estimate of the loan to value of the property. So, assess your own eligibility against all parameters before you approach a bank — do not add to the high delinquencies in this segment.

“Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!”

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