When you are thinking of borrowing a large amount of money to achieve a goal in life, the best option is to take out loans. This is an easier step to make life easier. If you need cash for a home renovation project, or if your financial situation has changed and you’re struggling to make ends meet, getting a loan secured by your home may be an option. Keep in mind that taking out a loan can have significant impacts on your credit score, which is why it’s important to get pre-approved before shopping around.
Loan with collateral
Secured loans are loans that are defended by collateral. The lender will want to know what assets you plan to use as collateral while applying for a secured loan. Until the loan is completely repaid, the lender will place a lien on the asset. If you fail to pay the loan, the lender can use the collateral to recoup the loss.
Obtain a secured loan:
Before applying for a secured loan, make sure you follow these steps:
- Check your Saving: Before applying for a home loan make sure your savings are good.
- When securing a secured loan, the amount you can borrow is largely based on the value of the collateral you intend to use. Therefore, get an appraisal or find out the resale value of the property before researching lenders.
- Shop around with different lenders: While searching around, you can compare the rates and fees of financial institutions. Prequalification is a service provided by many lenders that allows you to check what you’re eligible for without affecting your credit score.
- Apply for the loan with the most competitive lenders: If you choose an online lender, you can usually complete the full application procedure online. You might have to visit a branch of a bank or credit union if you’re applying there.
Criteria for eligibility –
To be qualified for a secured loan, you must fulfill the following criteria:
- To apply, applicants must be at least 18 years old.
- The applicant must be an Indian citizen (if you want to take loans from Indian banks).
- The majority of banks and lenders require that the applicant earn at least Rs. 3 lakh annually.
- To qualify for a loan based on a business’s income, the business must be in operation and profit-making for the last 3 years.
To establish your identity, your address, and other details, you will need to submit documentation to the lender or bank. The documents you will require for secured home loans are:
- Proof of residence: This verifies your residential address in the eyes of the law. It might be either your phone/internet bill, rental agreement, or bank account statement.
- Proof of identity: This should be a formal document with your name and photograph on it. It might be your driver’s license, passport, voter’s ID, PAN card, employee ID (if the firm is registered), or something else.
- Bank statements for the last 6 months
- guarantor (optional).
Before applying for a solo, you have to keep some information in mind. That is given below.
- Interest rate
- Conditions of use
- Process charges
- Loan duration
- Rate of EMI etc.
If you’re interested in applying for a secured loan, the most important thing you can do is do your research and compare lenders. To keep from losing your collateral, you must have a strategy in mind to repay your loan on time. While secured loans carry higher risks than unsecured loans, they may be useful tools as long as you make your monthly payments on time.
In this article, we have covered all the essential things you need to know about home loans. There are several things that you should do to make sure you get a loan secured by your home. Make sure to follow the steps above and have a better chance of getting approved for your next mortgage. We hope this has been helpful!