Usually, Indian weddings are extremely expensive. According to a survey, the average cost of such monumental events can range between Rs.20 lakh- Rs.2 crore.
- During 2020, the Indian wedding business had an overall turnover of more than Rs.450 billion.
Instead of draining all savings on weddings, individuals can look for an alternate funding option. A loan against property for wedding is an effective financing solution for intending borrowers.
A loan against property- Overview
As the name denotes, individuals owning a residential or commercial property can avail this financial product. Leading financiers extend substantial loan amounts on the basis of collateralisation of their property. The sanctioned amount relies on multiple factors, the primary factor being the property’s market value.
As per the RBI guidelines, lenders can offer 75%-90% of loan amount based on the property’s market value. Although personal loans are considered popular borrowing options among Indian borrowers to fund weddings, such financing options can act as a better alternative in the long run.
A loan against property for a wedding is ideal for meeting diverse wedding expenses regardless of the purpose.
Why is LAP perfect for financing weddings?
Customers looking for considerable funds to finance weddings must factor in certain pointers carefully. Below are some of the top-notch features that make a LAP one of the best options for funding wedding expenses-
Minimum interest expense
Generally, personal loans come with a higher interest rate as it does not require any security when approving the loan. In contrast, a loan against property for a wedding offers competitive interest rates. This difference in interest rates is mainly because of the collateralisation of the property.
Since financiers do not assume much risk while lending substantial loan amounts, this is why they keep loan against property interest rates affordable than other financial products. The illustrated example below will help you assess the difference in interest rates.
Mr. Ramesh acquires a personal loan of Rs.20 lakh for a tenor of 8 years at 13% p.a. interest. In such a case, he/she needs to pay an interest amount of nearly Rs.13 lakh, and the EMI would be approximately Rs.34, 000.
Now, if he avails a LAP, his/her monthly liabilities and overall repayment would be restricted. For instance, he/she takes Rs.20 lakh as loan for 8 years at 8% p.a. interest rate, his payable interest would be around Rs.7.15 lakh, and the EMIs would be around Rs.29, 000.
Repayment tenor flexibility
Unlike other unsecured financial products, a loan against property ensures greater repayment flexibility when choosing a tenor. Thus, individuals willing to keep their monthly instalments low can go for an extended tenor of up to 20 years. In contrast, to restrict payable interest against the loan, one can choose the loan foreclosure option at a suitable time or opt for a shorter repayment tenor.
In such cases, borrowers can take assistance from a loan against property EMI calculator to determine EMIs beforehand and adjust loan tenor as per repayment affordability.
Substantial loan amount
As already mentioned, Indian wedding expenses can go up to crores in certain cases. Usually, unsecured financial products do not offer sizeable loan amount due to the underlying risk factor regarding the borrowers’ repayment capability. In this regard, a loan against property for a wedding is a great alternative. Borrowers with a high-value asset and meeting loan against property eligibility criteria can grab preferred loan amounts and meet varied wedding expenses. Some of the basic eligibility parameters include-
- Age: 28-58 years (salaried), 25-70 years (self-employed)
- Employment: Salaried individuals must be working in a reputed organisation, while self-employed should have an established business with a stable income.
- Nationality: Both the applicants must be Indian residents
Besides, applicants are required to furnish some basic documents, such as KYC, address proof, income statement, financial sheets etc., to ensure a stress-free loan application.
Easy application procedure
To apply for a LAP and ensure quick loan application, individuals need to follow the steps below after getting an online application form-
1- Input income details to avail of the best loan deal suited to your financial standing
2- Select the “Apply for loan against property” option
3- Now, submit the form, and one of the representatives will connect you to discuss the loan offerings
Apart from these, reputed financial institutions provide pre-approved offers to accelerate the loaning procedure and reduce the hassle of extensive documentation. Find these offers on home loans, loans against property by mentioning your name and contact details.
Since a LAP does not come with any end-use restriction, individuals can use some portion of the funds to finance their honeymoon costs. In addition to that, based on the fund utilisation, individuals can avail loan against property tax benefits stated in the Income Tax Act and save substantially on the overall repayment.
Thus, availing a loan against property for a wedding is easier than other unsecured financial products by meeting the eligibility requirements. Nevertheless, one must check all the terms and conditions and associated charges to avoid any financial strain in the long run.