Loans Over Housing Loan
- 21 July 2016 | 52 Views | By Mint2Save
When it comes to loans for acquiring an asset, housing loan is, arguably, the only one where the acquired asset has a constant appreciation in its value. This is mostly reflected in the developing nations like India where real estate has always been a hot cake for investments.
Whenever I hear somebody taking a home loan, I wonder whether the loan would match the value of the house in coming years? When it comes to cars or machinery, their value keeps on depreciating, and the loan, which was taken while buying them, justifies itself from their initial price. However, whenever, a housing loan is considered, the value of property acquired or constructed from the finance enhances over a period of time. The same house, when already mortgaged, would not provide its owner the value of what its worth it. Further, what to do when the house requires a maintenance check? Extending the mortgage over the house as per its value, these loans level up the value of the house to its owner and fetch him more monetary resource when needed.
So, here we are, discussing all those loans, which one can take on the same property he has a running housing loan on.
1. Top-Up Loans/Overdrafts: These loans can be compared to personal loans, which are backed by the mortgage of house. Exclusively available to housing loan customers, this scheme shells out more than what a normal personal loan does and even the interest rates are dramatically lower than a Personal Loan (however, higher than a housing loan). An added security of the house can fetch you an interest rate relief of 3%-4%.
These loans can even be availed a overdrafts, where interest is charged for the amount withdrawn from the account for the number of days it is withdrawn. This way, your expense over interest is significantly reduced and you can withdraw the money only when needed and deposit back later.
2. Home Improvement Loan: While a typical housing loan runs for a period of 10-15 years, the house might require some extra work such paint, repair etc. Since such repairs and maintenance can shell out a lot of money, it is always better to opt for a loan and pay in small amounts than shedding a big chunk of your savings. Interestingly, a lot of banks cover even furniture in these loans and provide the interest rate of the housing loan (which, by far gets the lowest interest rate in the all loan products).
3. Loan for further constructions: At times, the need comes up to extend the house to further floors or create new rooms. Then, you can approach your bank where the house is already mortgaged and ask for a loan for further construction. Since, the motive of this loan is purely construction, the interest rates usually do not differ from that of the housing and like housing loan, lets you avail tax benefit too.
Plenty of options are available when it comes to loans over housing loans, but they only come when your previous housing loans are being repaid regularly and there is sufficient income left to service the loan after you take care of all your liabilities.