Leverage your property to meet your goals

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Leverage your property to meet your goals

Many dream, most have ambitions but everyone has a goal.                                                                                                   Did you know that you could leverage your property to finance your goal? When a bank sanctions a loan in your name, it needs an assurance that you will pay it back. However the bank uses your property or any of your assets as collateral for the loan disbursed. Unfortunately, in future if you aren’t able to repay the loan, the bank will take the legal possession of your asset and will ultimately auction it out.

There are 5 ways you can leverage your property to meet your goals.

1). Loan Against Rent Receivables: You can take a loan from the bank against the future rental income you will receive on your residential or commercial property. The loan amount is usually between 50-85% of the receivable rent of the residual lease tenure, depending upon the bank and it’s conditions. Rate of interest is usually between 11.5 – 14.5% and the processing fee is 1-2% of the total loan.

2). Top Up Loan: Topped up your railway pass? Well this is pretty much the same thing. A top up loan is an additional loan taken over and above an existing loan against the borrowers property. This is usually taken when the borrower has a short-term crunch and needs funds to finance his goal. The loan tenure is usually up to 20 years and the processing fee is 0.35-1% of the loan amount.

3). Home Equity Loan: As the name suggests, this is a type of loan where the borrower borrows against the value of his or her residential or commercial property. The loan amount is usually 50-65% of the current value of the property. The tenure is usually up to 15 years and the rate of interest is a whooping 11.5-15.5%.

4). Reverse Mortgage: This type of a loan is only applicable for the elder homeowner of the family. Here the borrower takes the loan against the value of his or her property and does not have to pay the mortgage loan until the borrower dies or the home is sold. Many elder homeowners prefer this type of loan against property. The loan amount here is usually 45%-65% of the current value of the property.

5). Overdraft Against Property: Here the borrower can take an overdraft against his or her property. The loan amount is usually up to 65% of the property value. The tenure is around 10 years with a rate of interest between 12 and 14%. The processing fee in most cases is 1% of the loan.

Have any goals in mind you want to meet? Study your financials, consult your Chartered Account, do your research and then leverage your property against a loan you will be able to pay back. Don’t take hasty decisions.

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