ONE HOUSE. MANY LOANS.

In lieu of buying homes, people went to the extent of breaking fixed deposits, emptying provident fund accounts and what not…

…And, now, considering how real estate prices have gone up 3- 4 times than what they were a couple of years ago, we feel it was worth it!

If you already own a property, celebrate! You’re a real-estate crorepati! 

Today, there are several options to earn from and unlock the value of property…!

Did you know there are more than one types of loans which you can take on your property?! There are a lot of banks stumbling over each other to offer mortgages…at interest rates much lower than other loans.

As for the other methods, here is a quick list of 8 ways that will help encash your house –

     1.Home Equity Loans – can be used for anything—education, medical costs, marriage, starting a business etc. The tenure is up to 15 years, interest rate 13-14% and the amount is 50-65% of the current value of the property.

     2.Home Improvement Loans – can be used for the internal and external repairs or the extension of your existing home structure by adding a storey. The tenure is up to 20 years, interest rate of 11 – 13% and the amount is 85% of total property for extension and up to 100% for renovation.

 

     3.Short-term Bridging Loans can be used for the interim period between the sale of an old house and purchase of a new one. The tenure is up to 2 years, interest rate of 12 – 14% and the amount up to 90% of the total cost of the new property.

     4.Property Overdraft Accounts which can be used for any purpose at the discretion of the borrower. The tenure is 5 – 10 years, interest rate 13 – 15% and the loan amount up to 65% of the total value of the property.

5.Top-Up Home Loans can be used for anything. The tenure is up to 20 years, interest rate being the same as the one on the home loan and the amount up to 70 % of the total property value minus the outstanding amount on the home loan. If you are still in the process of paying EMIs on your home loan, you can take a “top-up” loan.

For example –

User A loaned Rs 30 lakh at a 12% interest rate for 20 years...and has repaid regularly for 3 years.

Considering that the current value of the property has gone up to Rs 50 lakh, 70% of its total value, which is the maximum limit of the top up loan, would be – Rs 35 lakh.

Now, the outstanding loan amount is deducted from this, in User A's case, three years into the loan User A would have repaid a principal amount of Rs 1.31 lakh…thus the remaining amount would be Rs 28.7 lakh.

Thus, Rs 35 lakh – Rs 28.7 = Rs 6. 3 lakh.

This is the maximum top up loan amount User A is eligible for. 

     6.Home Con Version Loans can be availed for acquiring another property by selling the present one. The tenure is up to 20 years, interest rate the same as the home loan and the amount depends on the cost of the new property.

     7.Loans against rent, once again, can be availed for any purpose depending on the needs of the borrower. The tenure is up to 3 – 5 years, interest rate of 13 – 15% and amount up to 80% of the total rent receivable over the lease period.

     8.And, finally, Reverse Mortgages which too can be used for any purpose. The tenure is 10 – 15 years, interest rate 11 – 14 and the amount up to 65% of the current property value. 

...But, the bottom line in bold letters is that we mustn't treat our homes like a ‘cheque book’. Mortgage loans or top up loans... At the end of the day they too are debts!