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Excel calculator to show why loan against property is cheaper than personal loan

Almost everyone may find himself in financial problem someday even if he is a big saver of the money. There is sometimes which one needs to borrow money from someone.

In the first stage people prefers to take it from a friend or relative, but what if the amount and tenure required is big?

In this case one needs to go to the bank having a personal loan or loan against property. A loan with leverage your own house or other property is a better option in this case.

 One can use his own property (like house) for collateral for taking a loan with the bank. The value of the loan depends upon the market value of the property which is decided by the authorized valuer. Bank will offer the loan around 70% of the market value of the property.

There are some points by which loan against property are better than personal loan which are as under.

1- One will get higher amount of loan compare to personal loan in the case of loan against property.
2- Rate of interest will be low compare to personal loan. Rate of interest on personal loan varies from 14 to 22% whereas rate of interest on loan against property varies from 12 to 16%.
3- Tenure is also matters when applying for a loan. Personal loan tenure usually is 1-5 year whereas in case of secured loan, it may be 1-15 years depending on case to case.
4- There is a processing fee on both the loan but secured loan has less processing fees rate.

 But one needs to deposit the original documents of the property with the bank. It doesn’t matter one is residing in that property or let it out. The matter is one has the clear record and not any issue.

If the property is in joint names, all of them must be joint applicant of the loan. One can get loan against any type of freehold property.
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