5 Types of Loans to Make Your Life Easier Financially

Living a debt-free life is an excellent feeling. However, today it is not possible to be free of debt. Loans are essential in life. Banks are also liberal in sanctioning various kinds of loans for different activities. You can use the following 5 products to make your life easier.

1. Home Loan

Banks were reluctant to sanction Home Loans about two decades ago. HDFC Ltd was the only home loan player in the market. The opening up of the economy and the formulation of legislation like the SARFAESI Act 2002 encouraged the banks to foray into the Home Loan domain. People started taking Home Loans to purchase/construct their dream homes.

These are some of the benefits of Applying for a Home Loan.

• No need to save money and purchase a house
• Purchase your house at a comparatively younger age
• Savings in income tax
• Higher income translates into higher loan eligibility
• Put your income to proper use by building an asset

2. Home Loan Balance Transfer

A Home Loan is a significant investment. A concession of half a percentage point in the rate of interest can save you lakhs of rupees over the entire tenure of the loan. Banks today are free to fix up their rate of interest for Home Loans and other loans. The stronger banks were in a position to offer more significant concession to their customers. They started reducing their interest rates to attract more customers. It resulted in the introduction of a new product in the industry, the ‘Home Loan Balance Transfer’ (HLBT).

Here are some advantages of opting for an HLBT.

• Take benefit of the interest rate concession
• Reduce your EMI or your loan tenure
• Take advantage of the top-up offers from banks to do work like interior decoration and so on.
• Continue with the income tax concessions

Banks and other financial institutions don’t charge any prepayment penalty when their customers wish to go for an HLBT.

3. Loan Against Property

A Home Loan or an HLBT is a good investment for buying your dream house. However, there can be other expenses like weddings, expansion of business, higher education, urgent medical treatment, and so on. You can put your idle property to good use by taking a Loan Against Property.

Depending on the value of the property, your income, and your repaying capacity, banks have products whereby they finance up to the extent of 50-90% of the value of the property. The repayment of the loan extends up to 10 years. Hence, it becomes convenient for customers. It is not a Home Loan. Therefore, you do not get income tax concessions. The Loan Against Property is a type of a Personal Loan, but with collateral. The borrower can show ‘Personal Expenses’ as one of the reasons for availing this loan.

The Loan Against Property has also become popular with the senior citizens. Banks have formulated a unique product known as ‘Reverse Mortgage’ to cater to senior citizens. The advantages of this facility are:

• Senior citizens can lead an honorable life and not depend on their children for maintenance.
• There is a provision for receiving a lump sum amount to cater to medical emergencies of the senior citizens. Usually, the disbursement is in the form of monthly credits that can help in the regular maintenance of the senior citizens.
• There is no need for the senior citizens to repay the loan. Either partner can enjoy the benefits as long as they live.
• The nominees can opt to release the property by repaying the debt.

4. Personal Loan

A Personal Loan is one of the most popular products because of various reasons.

• It is the easiest of loans to apply for and get
• Being an unsecured loan, you need not provide any collateral
• There is no need for you to disclose the end use of funds to the banks
• The turnaround time for a Personal Loan is the fastest in the industry

Also Read: Personal Loans for Defence, Para Military and Railway Personnel

5. Business Loan

A Business Loan is a productive loan. All kinds of business enterprises, micro, small, medium, and large can avail business loans for constructing factories, buying equipment, meeting working capital needs, and other business-related activities. These loans are available with or without collateral.

The Business Loan is ideal for any start-up enterprise to develop its business without feeling the need to furnish collateral. The rates of interest depend on the activity of the company. Activities qualifying under the priority sector attract lower rates of interest. The Business Loan is the most comfortable way to raise finance for the business enterprises.

We have seen 5 different loan products that can make your life easier. Note that the credit history is the most crucial aspect that influences the banks to approve loans. Maintain an impeccable credit history and avail various kinds of loans to make your life financially comfortable.

To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 60+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.