Should you be taking loan against property?

by Finway FSC Empowering People Financially

One of the biggest dreams that people have in their life is to get their own home. Earlier, people had one ancestral home and families lived there generation after generation. But now, that the families have become nuclear due to urbanization and commercialization; everyone needs their own place to stay. Since the prices of real estate are skyrocketing every year, it is almost impossible to be able to buy a home from savings. Therefore, the only viable option is to take a home loan in Delhi or anywhere else in the country. Yet, despite the many benefits of loans, there is still considerable stigma attached to taking loans. Let us try to understand the importance of loans and debunk the myths surrounding them.

A feeling of fulfillment

After you successfully acquire a home loan in Delhi, you are overwhelmed by this feeling of utmost satisfaction and gratification. Getting their own house is one of the biggest achievements an average person can hope for and if loans help them achieve their dreams, then there is nothing wrong with the process.

There are tax benefits

The Indian government has taken a lot of steps to encourage more and more people to invest in real estate as it is one of the greatest contributors of GDP in our country. One such measure is tax deduction on the interest as well as deduction on the principal amount of the loan. Naturally, with such lucrative offers, more and more people are motivated to get a home loan in Delhi and other metro cities in the country. You should, however, remember that you cannot claim the tax deduction if the property is under construction.

Freedom from prepayment charges

In unsecured loans, the borrowers have to pay prepayment penalties, but loans against property are free from such overcharges. This also means that if and when you have excess capital, you can make a partial payment towards your mortgage and reduce your burden of paying excess interest.

What is a loan against property?

Loan against property has become a common term these days. In its process of disbursement, it isn’t much different from any other kind of loan. The major difference, however, is that it is acquired by pledging your residential or commercial property as collateral to the lending institution. Since it is a secured loan, which means that it poses no threat to the lender, it is made available at lower interest rates, and is disbursed without excessive probing and investigation into your documents. However, the lender may still check your savings, annual income, employment track, and other related documents, so be prepared with them.

At the end of the day, the important thing to keep in mind is that taking loan isn’t something to be stigmatized and banks aren’t something you should be afraid of. Obviously, it would do you well to be cautious and careful. And always remember one important thing: never take more loan than you absolutely have to. The reason is that regardless of the fact whether you spend the borrowed money or not, you’ll have to return every penny – and with interest! So it isn’t wise to borrow more than what is needed. Careful planning can go a long way in saving you a lifetime of headache.