Assets which can be used for taking a Loan
Loans are of two kinds. One kind is the unsecured loan which does not require any asset to be mortgaged. The loan is offered based on the borrower’s income and financial standing. The other kind is a secured loan wherein an asset needs to be mortgaged with the lender.
Depending on the value of the asset which has been mortgaged, the loan is allowed. Secured loans are better than unsecured loans because they allow higher loan quantum and the interest rate is also low. That is why many borrowers opt for secured loans for their financing needs. However, when it comes to securing assets, many of you don’t know which assets can be mortgaged for a loan. So, here are some of your common assets which you can mortgage and avail a secured loan –
- Real estate
Your real estate investment is one of the best assets to be mortgaged for a loan. If you own a property in your own name, whether it is residential or commercial in nature, you can mortgage the property and avail a loan against property. The lender would assess the value of the property which you mortgage and allow you up to 90% of the property’s value as loan.
- Gold
Your gold ornaments, jewels and other articles can also be mortgaged for a gold loan. Under gold loan, you have to deposit your gold assets with the lender who acts as a custodian of your asset. The lender then values the gold on an independent basis and allows you funds as per its valuation. The gold remains in the custody of the lender till you repay the loan. Once the loan is repaid you can get your gold back.
- Life insurance policy
Life insurance policies can be used in two ways to get a loan. One, you can avail a loan from your insurance company itself. The company allows you a loan against the surrender value of your life insurance policy. Two, you can use your policy as a collateral and get a loan from a lender. Lenders allow loans against securities and your life insurance policy is one such security which can get you a loan.
- Fixed deposits
Your fixed deposits can also be mortgaged for a loan. Fixed deposits also qualify as a security and can be mortgaged under loan against securities. A percentage of the fixed deposit made is allowed as a loan. The term of the loan would either be equal to the remaining term of the fixed deposit or less than that. Your deposit would continue to earn interest even if it is mortgaged for the loan.
- Your investments
Other than your life insurance policy and fixed deposits, other investments like mutual funds, stocks, shares, National Saving Certificates, etc. can also be used to avail a loan. These investments are allowed as collaterals under loan against securities. The loan is offered against the value of the investments. In case of NSCs, up to 80% of the face value of the investment can be taken as loan. In case of mutual funds and stocks, 50% to 75% of the market value of stocks can be taken as loan.
Additional Reading:- Cover all of your personal expenses with Loan Against Property
So, you can use any one or more of these assets you have to take a secured loan. The interest rates would be low and your financing needs would be easily met.