Loan against property to fund your dream wedding could prove beneficial if you are looking at a high-value loan with a lower interest rate than a Personal Loan. But, do know about the pros and cons before you decide to take one?
Weddings in India involves huge preparations, right from fixing a venue to finalising catering. The related expenses make weddings a costly affair and sometimes all the saving is exhausted in making the wedding a successful event. But, what if that saving is not enough and you need more funds. You may choose to borrow from friends and family members to fund the wedding. But even then, you might fall short of the required budget for the wedding.
You may explore various other options to arrange for higher funds like Personal Loan or loan against property. A Personal Loan may seem like the best option if you need just a few lakhs to fund the wedding. However, the interest rates on a Personal Loan is quite high – 18 to 24 percent. Besides, the repayment period for Personal Loans is one to three years, which would be difficult to repay if the loan value is high.
In this article, we discuss the advantages of taking a loan against property to fund your wedding.
This can help you fetch a loan equivalent to around 50 percent of the value of the house. So, if the price of your property is Rs. 50 lakh, you can get a loan of up to Rs. 25 lakh. It can be beneficial if you are looking for a high-value loan.
Interest Rates Lower For Loan Against Property:
Compared to Personal Loans, loan against property comes with a lower interest rate ranging from 12 to 14 percent. The duration to repay the loan is longer than Personal Loans.
Top-up Loan On Mortgaged Property:
If you have already mortgaged your property to the bank, then you can contact the financial institution to offer you a top-up or additional loan to fund the wedding requirements. If the bank feels that you have the income to pay back this additional loan along with the EMI on the current loan on the property whose price is on the rise, they can offer you a top-up loan.
How Easy It Is To Avail A Loan Against Property?
Banks have some procedures to follow before offering loan against property. They will do due checks and verification, ascertain the ownership, value and residual life of the property. Then, they will check the repayment capacity of the borrower before approving the loan. Hence, this might take some time – about 15 days to a month. Hence, you must start early to avail a loan against property. Besides, banks will charge a processing fee – about 0.5 to 1 percent before offering you loan against property.
Hence, you must weigh the pros and cons of taking a loan against property to finance the wedding expenses. Go for a loan amount that you feel you can pay back and which will meet your wedding expenses as well. Do not go over budget just because you got a higher loan amount because eventually, you need to pay back the bank.