Wedding in India involves a lot of preparation, right from finalising catering to fixing a venue. These expenses make the wedding a costly affair and sometimes all the saving is exhausted in making the wedding a successful event. But, what if the savings are not enough to finance your dream wedding. In such situations, you may want to explore various other options to arrange for funds like personal loan or loan against property. A personal loan may be the best option if you need a small amount to fund the wedding. However, the interest rates on a personal loan are quite high as compared to secured loans such as loan against property.
Here are the advantages of taking a loan against property to fund your wedding:
- Loan amount: If you are applying for a loan against property, you may get a loan amount of up to 75 percent of the value of the house. So, if the price of your property is Rs. 40 lakh, you can get a loan of up to Rs. 30 lakh. It can be beneficial if you are looking for a higher amount.
- Lower interest rates: As compared to personal loans, a loan against property comes at lower interest rates. The interest rate ranges between 8.80 to 14 percent. The repayment period of loan against property is also longer than personal loans.
- Top-up loan on a mortgaged property: If you have already mortgaged your property to the bank, then you can ask the bank or any other financial to offer you a top-up loan to fund the wedding requirements. If the bank feels you can repay this additional loan along with the EMI on the current loan, it can offer you a top-up loan.
- Multipurpose loan: A loan against property can be used for several purposes such as business expansion, paying off for marriage, studying abroad, for medical emergencies or debt consolidation.
- Easy to avail: Since a loan against property is a secured loan, banks are more willing to provide this loan. Therefore, it won’t be difficult for you to get this kind of loan.
How to avail a loan against property?
Banks have certain procedures to follow before offering loan against property. They will do due checks and verifications, ascertain the value, residual life of the property and ownership. Then they will check the repaying capacity of the borrowers. Hence, this might take some time. So, you must start early to avail a loan against property. Besides, banks also charge a processing fee of up to 1 percent before offering you a loan against property.
To apply for the loan, your minimum age must be at least 18 years old and the repayments must be made before the age of 70. Your net monthly income should be Rs. 40,000 or more if you are a salaried employee. For the same loan, self-employed individuals should have a net annual income of Rs. 3 lakhs or more. Plus, a credit score of 650 will increase the chances of your loan application approval.
In conclusion, you must always weigh the pros and cons of taking a loan against property to finance your expenses. Go for a loan amount that you feel you can comfortably service and which will meet your wedding expenses as well. Do not go over budget as you would eventually need to pay back the bank.