Planning a wedding can be a difficult task. With a million decisions to be made, from jewellery to caterers, an Indian wedding can easily cost anything from Rs. 2 lakh to several crore. To celebrate this special day without having to worry about funds, you can avail of a loan against property for weddings.
Why should you opt for a wedding loan secured by real estate?
To begin with, a loan against property has a lower interest rate than a personal loan. Lenders charge between 10.5% and 24% interest on personal loans, whereas the interest rate on a loan secured by property ranges between 8.3% and 14%. This means that your EMIs on a loan against property will be lower than on a personal loan.
Before authorizing a loan against property, lenders usually inspect the property and perform due diligence. They then determine the property’s worth, who owns it, and its estimated value in the years to come.
Apart from this, lenders also take into account the borrower’s repayment capacity, depending on his or her income, credit, and overall financial profile. With the right lender, the process of applying for a loan against property can be seamless, and those who meet all eligibility requirements can benefit from substantial funding that is disbursed in a matter of days.
Benefits of opting for a wedding loan against property
- Lower interest rates: When compared with a personal loan, the interest rate on a LAP for weddings is always lower. As a result, getting a Loan Against Property (LAP) for your wedding is a cost-effective option.
- Availability of sizeable funding: Mortgage loans for marriage often have a loan-to-value ratio (LTV) of 70-75%. In other words, you stand to gain a sizeable loan amount while retaining the right to use the property as you deem fit throughout the repayment tenor.
- Balance transfer facility: On a loan against property (LAP) for marriage, most lenders offer balance transfer options. If borrowers believe the present rate of interest on a loan is higher than market rates, they can transfer the debt to another financial institution. Moreover, when transferring a LAP, eligible applicants also have the option to apply for further funding in the form of a top-up loan.
- Longer repayment term: A loan against property for a wedding can be taken out for up to 18 years. As a result, you have the option to make your EMIs more affordable with a longer repayment period.
- Easy process: A loan against your property for marriage can be transferred directly into your account once approved. It only requires a minimal number of documents, and the application process is straightforward.
Documents needed to apply for a loan against property
Listed below are the general documents that financial lenders will require you to submit:
- Aadhaar card, passport, voter’s ID card, and other forms of identification
- Passport, Ration Card, Driver’s License, and other forms of identification are required to prove your address
- Salary slips, bank statements, and other forms of proof of income are required
- IT returns
- Registration certificate, sales deed, lease agreement, property tax receipts
- Property insurance documents
Individuals eligible to take a loan against property
Salaried employees
- Anyone who works for the government or a reputable public/private company on a permanent basis (minimum 3 years of work-ex).
- The applicant must be over the age of 23 at the time the loan is taken out and under the age of superannuation.
Self-employed individuals
- They must be able to prove steady income through an enterprise with a vintage of at least 5 years
- In terms of age, self-employed applicants should be over 28 years of age.
Working professionals like Doctors, engineers, dentists, architects, chartered accountants, cost accountants, company secretaries, and management consultants can apply under the respective categories. Some lenders even offer extremely competitive rates for self-employed professionals such as doctors and CAs, so much so that the offer is comparable to that of salaried professionals.
Three things to consider before you opt for wedding loan against property
Your EMIs on a loan for the wedding would be based on these three factors, which is why it is important you consider each aspect carefully and then chose the best option available.
- Principal amount: The amount of a loan against property for a wedding obtained from a bank or financial institution is determined by the mortgaged property. As a result, the larger the loan, the higher the EMIs.
- The interest rate: It is the most important aspect in determining the ability and ease with which the loan may be repaid. A higher interest rate may restrict you from taking out a larger loan or force you to repay the loan over a longer period of time. A lower interest rate, on the other hand, allows for a larger loan amount to be obtained and enhances the prospect of easy payments.
- Mortgage Loan Tenure: The length of a mortgage loan is determined by the borrower’s present age and retirement age. The shorter the loan duration, the higher the EMI.
Therefore, before you make a decision on a wedding loan, it is imperative that you accustom yourself with all the options available in the market and chose the best alternative.
