Things That You Use As Collateral To Apply For Housing Loans

By Author: Aditya Ahuja
Total Articles: 8
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Do you want to purchase a new home? You need a home loan for purchasing a new residential or commercial property. However, getting loan approval is not easy if you have an average credit score. It takes many years for a person to develop a good credit record. Moreover, self-employed and retired persons find difficulty finding a loan against a property without income proof.

If you search for a home loan without having a good credit score, applying for a loan with collateral is the best option. A loan with collateral refers to a lending process that involves no credit checking. Considering its collateral, the lender disburses the loan amount against an expensive item or asset. If the borrower fails to repay the amount, the lender can use the collateral to get back the money.

1. Your House or Property as Collateral

You can use your house of property as collateral for getting a loan. Typically, this type of loan is known as a second mortgage. A second mortgage is a popular option for getting a personal loan against ...
... a house or property. If you have multiple properties, you can use any of them to get a loan.

Now, how much amount can you get? Different second mortgage lenders have different terms and conditions. They also follow different methods of judging the property value. According to the surveys, a borrower can get as much as 90-95% of the property value as a loan.

This kind of loan is popular among those who may face a short-term financial crunch due to not having a steady source of income. If you have a low credit score, you can also use your property as collateral to purchase a second home or property.

2. Using Car as the Collateral

A vehicle is an important and expensive asset. Thus, it is not difficult to find a loan against this asset. If you have a car, you can use it to apply for a personal loan. However, there are some shortcomings of using vehicles as collaterals.

Firstly, the value of a car does not increase with time. As it grows older, it loses its value. Thus, you will not get a big amount of loan against your car. Secondly, the loan amount depends on the type of vehicle you have. You will get a good deal from the lender if you have a luxury car. If you have multiple vehicles, you may get a sizable loan amount.

You may not get enough money to purchase a new home or apartment using a car. But, it is a useful asset for buying plots. Many people also seek loans against vehicles for property renovation.

3. Invoices as Collateral
Invoices can be used as collateral for getting a personal loan. As it sounds, it is quite popular among entrepreneurs and business owners. Other people do not have much idea about such loans, and they hardly go for such loans. When there is a short-term business financing crunch, the users have made such a loan application.

Self-employed professionals can use their invoices as collateral for personal loans. You do not have to share income and credit details for such loans. Depending on the invoice amount, you can find an exciting deal.

4. Gold for Collateral

Many people have the habit of gold investment. If you have this habit, you can use the investment gold to get a personal loan. You do not have to leave the gold stock, and at the same time, you shall get money to meet your sudden requirements. Even gold jewellery can be used as collateral.

Gold is a valuable asset, and thus you can easily find a personal loan against it. Various well-known private financial institutions offer gold loans. Some banks also offer gold loans. In India, gold loan is popular due to the availability of many lenders.

How to Get a Loan with Collateral?
If you search for a loan against property without income proof, you need to find a suitable lender. You can visit the nearest bank to find collateral lending deals. The benefit of a bank loan is the low-interest rate. On the other hand, bank loans have some drawbacks. You may have to undergo a long and tiring process. Other private lenders offer hassle-free lending, though the interest rate may be high.