In the mortgage loan segment, loan against property has been a reliable source of financing to raise funds of high-value. As reported by the Financial Express, the value growth of loan against property is expected to remain at a CAGR of 13% between FY 2019 and 2024.
Although it is lower than many other financing options in the retail loan segment, the utilities extended by a loan against property give it an upper hand over many others. Add to it the competitive loan against property interest rate and long repayment terms; and this financing option fares well among borrowers seeking a loan option with reduced EMI payments.
Take a better look at the mortgage loan option with its eligibility, repayments, interest rate, and all other details explained!
What is a Loan against Property?
A loan against property is a secured form of financing that allows borrowers to raise substantial funds by mortgaging their assets. These are also long-term loans with tenures extending from 15 to 25 years.
Thus, they can be a suitable funding option if you plan to raise substantial fund and defer its repayment to an extended period. Another typical feature of a loan against property is that a borrower can utilise the loan amount to fulfil any funding requirement with ease as it comes with no end-use restrictions.
Nevertheless, borrowers need to understand that although the loan against property interest rates are lower than many other funding options, a long tenure leads to interest accrual amounting to a hefty sum, which can affect their finances significantly. It is thus ideal to seek a repayment tenure that keeps such interest accumulation in check. Alternatively, you can seek a funding option that offers similar benefits as a loan against property but with better terms like a short tenure, and even lower interest rates.
But, before delving into the details of alternative loan options, take a look at some of the conditions attached with the availability of a loan against property.
Eligibility Criteria and Repayment of a Loan against property
The foremost loan against property eligibility criterion to avail the funds is ownership of a property, be it residential, personal or commercial. The applicant can mortgage the property to raise finance. Other requirements include –
- Income eligibility and employment status.
- Age requirement.
- Credit score.
Although the weightage is significantly higher on the property to be mortgaged, a lender verifies the above mentioned details to confirm the borrower’s credibility before approving the loan application. Further, you also need to submit a handful of property-related documents that establish your ownership of the same, along with completing other paperwork.
As for paying off the loan liability, you must stick to the loan against property repayments schedule set by the lender and pay EMIs on time. Not doing so attracts penalty, which can affect your financial standing.
Thus, while low loan against property interest rates, long tenure and high-value financing make it a suitable option for those seeking very high amounts to be paid off in the long-term, there are other more easily available and flexible financing options at hand.
For instance, gold loans come off as a more accommodative funding option that not only eliminates the hassles associated with a loan against property but also brings additional benefits.
Check them out!
How do Gold Loans Suffice as a Suitable Alternative to Mortgage Loans?
Similar to a loan against property, a gold loan is also a secured advance. To avail it, all you need is gold ornaments and jewellery, which, by virtue of its heritage value, is present in most Indian households.
The equity lying in gold can be conveniently utilised to raise sizable funds from lenders. Plus, some of the features that make a gold loan a suitable alternative to a loan against property include –
- A short repayment tenure
Reputed lenders offer gold loans for a short tenure which can extend up to 6 months, with a possibility of extension for 6 more months if required. Thus, irrespective of the loan amount you avail, you can get done with the liability in a short while.
- Advantage of low interest rate
Although loan against property interest rates are considerably low, there is little to no scope of negotiation and a borrower has to bear interest at the specified rate every month until the tenure’s end. Contrarily, reputed lenders allow individuals flexibility in choosing the interest rate as per their convenience. Rupeek Fintech Private Limited is one such lender offering the advantage of a suitably low interest rate.
- Negligible eligibility and document requirement
The eligibility criterion for a gold loan remains limited to ownership of the precious metal with a value suitable as per the loan amount requested. Also, document requirements are cut down to bare essentials like identity and address proof, or any other paperwork to fulfil KYC registration.
With reduced paperwork, the time taken for verification and other formalities is also reduced, making financing readily available to you for addressing any urgent funding needs.
Well, wait! There’s more to gold loans than just this.
Additional Borrower-Friendly Features of Gold Loans
Gold loans from Rupeek Fintech Private Limited, a reputed lender, also come with several other unique features that increase their accessibility and management.
- Complete online processing with loan at your doorstep
To avail a gold loan from the lender, all you need to do is apply online through their app or website. Next, a loan manager visits your house for gold valuation, following which you receive approval and disbursal; with the entire process taking only 30 minutes.
So, you don’t need to step out of your house to avail the loan. Also, the loan manager leaves your house with the pledged gold only after the amount has been disbursed to your account.
- Highly secure handling and storage of the pledged gold
Once pledged, the gold is collected in a GPS-traceable bag and transported to the nearest partner bank’s branch located within 3 km to be stored in its safety vault. Additional safety is provided by insuring the gold during the loan tenure.
- Highest Loan to Value
Rupeek also offers the highest Loan to Value (LTV), thus allowing you to maximise your possibilities of raising funds by pledging gold. Know that LTV is the maximum loan amount a lender is ready to sanction as a percentage of the pledged asset’s market value.
- Repayment as per your convenience
You can repay your gold loan conveniently by paying only interest during the tenure and making bullet payment by the tenure’s end. Or, you can also opt to defer the entire repayment liability to the tenure’s end and pay at one go.
With these unique features, gold loans not only surpass affordability through competitive lending as loan against property interest rates but also make repayment and loan management easy. Make sure to use a gold loan calculator available online to estimate the loan amount you can avail as per the gold’s value and apply accordingly.