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Here’s how a loan against property can help manage multiple debts
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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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Juggling between several debt repayments? You are not alone. We all take loans from time to time to accommodate our growing financial needs. These include secured and unsecured loans as well as the usage of credit cards. While you may be paying off your debt on time, it can be quite stressful to manage to keep your financial plan stable. A number of different debts will also mean different interest rates. This inconvenience can be avoided by consolidating your debt with the aid of a loan against property.
Here’s why a loan against property can take care of your multiple loans:
You make big savings on interest rates – One of the most difficult aspects of having multiple loans is having to pay multiple interest rates. It could also mean that you are paying larger sums of money. Loan against property generally comes with a much lower interest rate. Importantly, the rate is fixed and you also have a set period within which you can make the repayment. This ensures that you also pay a minimum rate of interest. It may also come with some tax benefits depending on your lending partner.
Reduced monthly payments – With multiple payments and several creditors on the list, it is not uncommon for you to lose track of your repayment due dates. Ending up making late payments will cost you an additional fee. This is also likely to hit your credit card score negatively. Paying off these several loan using a single payment sourced from a property mortgage loan will reduce the hassle of keeping a tab on a wide list.
Higher loan limit – The property kept as mortgage has a direct impact on the amount loaned against property. Depending on the current value of your property or land, you may be eligible for a higher loan sanction. This is essentially great if you have a several high-rate loans to consolidate or pay off. Most lenders let you borrow up an amount that range from INR 10 lakhs to INR 5 crores.
While a loan against property can help with financing the multiple loans, understand that it is no magical way to get rid of debt. It helps in keeping your finances on track and if used irresponsibly, it can lead it you deeper down the debt hole.
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