Loans have become a convenient financial solution to manage funds for every need, be it personal or professional. Whether it's buying a new house or car, raising money for your child's education, or any other purpose, you can get a loan according to your needs. Many types of loans are available in the market such as B. personal loans, gold loans, wedding loans, etc., but many people are not familiar with home loans. Do you know what type of loan it is? let's find out
What is a Loan against property?
A title loan, as the name suggests, is a loan held by the applicant or his guarantor, which is usually the parent. assigned to the property value. The property is mortgaged which means that the title deed and legal title to the property remain with the bank until the loan is repaid.
Loan against property features
- Home equity loans or mortgage loans have certain unique characteristics that set them apart from other types of loans.
- It is considered a secured loan because it conflicts with the value of an immovable asset such as property. B. property rights granted.
- The purpose of this loan can be in the form of personal and business financing.
- The maximum amount that can be redeemed for a property is between 60% and 80% of the final market value of the property. This ratio is known as the loan-to-value ratio.
- For home loans, the property must be in your name or the name of your co-applicant. These can be residential or commercial, but commercial properties are subject to additional inspection and verification.
- Interest rates are very low because the property is used as collateral for the loan. This reduces the risk of default by the borrower.
- Banks offer the possibility of a longer payment term, which can be up to 15 years.
- Undeveloped land and rental residential properties can also be used as collateral to take out loans.
Loan against Property
Although the main criterion for a loan is that the property is in the name of the applicant, most banks also require certain other eligibility requirements to be met, which are as follows:
- You must be a busy person
- The minimum age is between 23 and 25 years and the maximum age for loan repayment is between 65 and 70 years
- To make sure you get the money to repay the loan
- Your financial situation, creditworthiness and income will also be checked to determine your rights
Advantages of taking a real estate loan
Taking out a home loan is a better option than taking out a personal or gold loan if you own real estate. Below are some reasons why this type of loan is more suitable for borrowing large amounts:
- You can use your property to take out a loan without transferring your ownership
- Interest rates on real estate loans are much lower than personal loans
- Because the property value is quite high, you can get a much bigger loan compared to a personal loan because in a personal loan you get a loan based on your income
- The repayment period is long, giving you plenty of time to pay off.
