Kinds of Loans against Securities

Previously we had discussed about secured and unsecured loans in India. Today, we shall speak about the loan alternatives that you can opt for in case you possess an asset.

• Loan against Gold: The best thing about gold loan is that the processing is quite quick as compared to other loan processing time. The gold loan is processed depending upon the security you deposit. The rate of interest is directly proportional to the margin of security you deposit. There are no pre-processing charges and not much documentation is involved
• Loan against your Insurance Policies: Some of the insurance policies are eligible to get you a loan. This can be known if you have a surrender value associated with your insurance policy. This is surrender value is available mostly after payment of 3 yearly premiums.  If your insurance policy has surrender value then you are eligible to take loan that is close to 90% of the surrender value.
• Loan against fixed deposit: Like many people you too would have fixed deposits which you would not wish to break in case of an emergency. At such times, you can opt for a loan against fixed deposit. The interest rate charged would be 1-2% higher than the interest earned on your current FD and you can take loan for about 75-80% of the current FD.
• Loan against property: In this type you can opt for a loan against property which could be either residential or commercial. Banks can give loan up to 50% of the market value of the property. Usually this type of loan is opted for large amount of loan.
• Loan against other investments:

1. Shares and Mutual Funds: You can opt for loan against shares and mutual funds too. However, there are only few approved funds and shares that can get loan sanctioned for you. Because of the volatile nature of value of shares and funds, you are likely to be asked for more margin while applying for loan.
2. Public Provident fund: You can also opt for loan on your PPF account. However, you are eligible to opt for loan from the 3rd year to the 6th year and the loan amount will be only 25% of the balance in your PPF account 2 years back.

Impact of increase in Stamp Duty in Maharashtra

Many of us have been making plans of buying a property in a city like Pune for the past few years. However, due to some or the other reasons, could not finalize onto a property. But now that the scenario in the real estate industry in the city and the complete state of Maharashtra in general is not the same as few years back, people who have been showing interest in making a property investment or purchase may now have to dig their pockets for more money for the same property. The State government of Maharashtra has recently imposed a 5% of stamp duty on all the property purchases in the places that fall under municipal boundaries throughout the state.

Stamp Duty

However, this would result in a further rise in the price of the property, the overall effect of only this would not have a huge impact. For an example, if we consider a property worth Rs. 50 Lacs located in within the municipal corporation limits of the city named “ABC”, the total cost would add up by only 0.34% for the one who is buying that property. This would happen if it is properly analysed keeping in mind the rise in stamp duty. Also, a similarly costing property is situated in the municipal council’s limits, it would charge a lesser stamp duty , say 4%, and even lesser, if it is situated in a Gram Panchayat where it would be just 3% or so. If you are a potential buyer and want to buy property in locations that fall in the outskirts of the city, then it would prove to be beneficial for you. These locations in the outskirts of the city would have many projects which are under construction that provide houses in affordable rates and low costs.

However, if you feel this is it to the impact of the increased stamp duty by 5%, then you may be wrong at the moment. As a buyer, you will still have to take into consideration the overall impact of this increase in stamp duty which has been recently proposed to be taxed at a raised rate referring to the measures brought in by the Central Budget. The increase in the service tax for property buying and commercial lease undertakings will also add to the total cost of the property. Hence, when we look at all of these factors, they may surely cause some intensity in the prices of the properties.

Read More:

- Top three IT centric locations in Pune you may consider for investment

- Factors to be considered before opting for a home loan