A house is a person’s pride and honor but it can also lead to a person’s financial gain and prosperity. No matter what a person owns, whether it is an apartment or their own house, they can use it to get residential property loan. If you have any medical emergency or you want some working capital for your business then you can use your house or residential property to get the mortgage loan. Later, if you repay the loan amounts on time then the lenders will hand over the original papers of your house.
What Is A Residential Property Loan?
These loans are basically given to a person against their property. A person can mortgage their own residential property to get money in return according to the value of the property. This is extremely useful for people who need money instantly for urgent financial needs.
What Are The Benefits Of Such Loans?
1. The interest rate of such loans is comparatively lower because here you need to mortgage your property as collateral. Thus the rate is significantly lower than a personal loan. The rates of such loans usually vary from 12% to 15% while personal loans can have interests that go as high as 25%. Apart from that, you can avail long term residential property loan and you need to pay small EMIs.
2. No fine is issued for foreclosure of the loan. Foreclosure of a loan means that the borrower of the loan prepays the loan before the end of tenure. In the case of a personal or business loan, you need to bear a pre-payment or foreclosing charge. But for residential property loan, you do not need to bear such charges and you can close your loan account anytime according to your convenience.
3. These kinds of loans are far easier to get than personal loans because the lender doesn’t care about the purpose of the loan and the lender takes the person’s house as collateral which makes a safe deal.
4. Residential property loans are provided by banks or loan providers for a longer period of time when compared to personal loans. The tenure for these loans can extend up to 15 years, unlike 7years which the tenure for personal loans.
5. The EMI is much lower in these loans mainly because the loans are given out for longer tenures. The longer the tenure for the loan the lesser the EMI. A person might choose a longer tenure if they are unable to afford to pay high EMIs.
6. The loan amount can be huge because one can borrow up to 60% of the market value of their property from such loans.
The documentation process is much easier when loans against residential property come into play. Only a title deed with no amount of encumbrances is enough documentation for such loans. You do not need to submit your income proof and other business documents to avail these loans and you can easily apply for residential property loan by submitting the original papers of the property.
Things To Keep In Mind While You Apply For Residential Property Loans:
- Borrow For A Short Tenure: Even though longer tenure results in lesser EMI, shorter tenure means one is paying less interest overall.
- Borrow According To Capacity: One should never borrow with interest over 45% of their income or salary.
- One should read the loan related documents carefully before applying so that there is no condition that will end up hurting the borrower.
Knowing the above few points and assessing the loan details carefully and smartly, one can easily land a safe residential property loan or loan against residential property.