Generally, most people start saving for retirement as soon as they begin to earn. Salaried individuals working in government and semi-government institutions receive pensions regularly after retirement. However, there might be instances when pensioners would need extra cash to deal with certain emergencies.
In such instances, they can use their commercial or residential property as collateral and avail a loan against it. A loan against property for pensioners is a secured loan specifically designed for senior citizens.
The following sections will cover more details about loans against property for pensioners.
Features of loans against property for pensioners
The features of loan against property for pensioners are listed as follows:
- As mentioned above, this loan falls under the category of secured loans. Senior citizens can pledge their residential, commercial or industrial properties to avail funds from financial institutions.
- Some NBFCs (Non-Banking Financial Corporations) offer quick approval and disbursal for loans against property. The process is easy and entirely hassle-free. Once eligible applicants complete the approval process and lenders process the application from their end, borrowers can receive the loan amount in their bank account within a few days.
- Financial institutions offer flexible repayment tenure which may extend up to 20 years. But, usually, they extend such facilities only after minutely checking the applicant’s eligibility.
- Many financial institutions send their professionals for convenient document collection from the doorstep of applicants. This helps in speeding up the entire approval process.
Benefits of loan against property for pensioners
There are multiple benefits to availing this type of secured loan. The following points will cover the important advantages of applying for a loan against property for pensioners:
- The eligibility criteria are quite simple and easy to fulfil.
- Instant disbursal of funds is a major advantage.
- Considering these loans are secured loans, lenders charge a lower rate of interest compared to unsecured loans.
- Pensioners can continue using their property. They do not lose ownership of their property even after they mortgage it.
- Considering that loans against property are secured loans, applicants can get a high-value loan with an expensive property. Eligible applicants can receive loans of up to 75% of the market value of their property.
- The repayment tenure for loans against property is flexible. It is long enough for pensioners to comfortably repay their loans.
- Pensioners can enjoy the benefit of partial fund disbursements. They can use only a part of the loan amount to finance their current needs and keep the remaining portion for a later stage. This facility is particularly useful when pensioners apply for a loan for construction or funding long—term working capital requirements.
- Pensioners can use a loan against property to fulfil various financial requirements including children’s higher education, travelling and medical emergencies. In other words, these loans do not carry any end-use restrictions.
Reasons to use a loan against property EMI calculator
Calculating EMI beforehand helps to formulate effective financial strategies. It helps people understand how much loan they can afford to take. People often compare offers from various financial institutions taking into consideration their interest rates. An EMI calculator allows people to easily get an estimate of the cost of a loan.
A loan against property EMI calculator is an online financial tool which helps applicants understand their monthly repayment obligation if they use their property as collateral to avail a loan.
Here are the benefits of this financial tool:
- It provides accurate results in no time. Users have to slide the bars in the calculator as per their requirement to view their loan against property EMI.
- These are free-to-use tools. People can use them at any time and as many times as they wish.
- This financial tool is easily available online. If someone wishes to use it, they simply have to go online and type ‘loan against property EMI calculator’. Many results will come up on the search engine.
Loan against property tax benefits
The following points cover tax benefits related to a loan against property:
- As per Section 37(1) of the Income Tax Act, people can claim tax benefits if the loan amount is used for business purposes. The business expenses that are not capital or personal expenses can be included under income or loss statements. Moreover, people can claim tax benefits against the interest amount and related fees.
- Salaried individuals can claim tax benefits up to Rs.2 lakh under Section 24 (b) if they avail a loan against property. They must use the funds to purchase a new residential property. The interest amount payable will be eligible for a tax deduction.
Why should people focus on financial stability after retirement?
Every person should start retirement planning as soon as they start earning because it ensures financial stability during retirement. The following points highlight why this is important:
- When pensioners have financial stability in their lives, they command respect in society. On the contrary, a person without financial stability is not much respected even if he/she is highly qualified or of good character. This is because financial stability indicates responsibility and the ability to manage one’s finances effectively.
- Being financially stable ensures physical and mental well-being because it reduces stress and associated health problems.
- Financial stability is important for retirement. It enables pensioners to invest in various schemes that guarantee a life of comfort.
There are various types of loans against property based on property types and usage. For instance, people can avail a loan against their residential or commercial property. They can also avail a loan against a rented property. These loans can be used to finance debt consolidation, children’s higher education or a wedding.
Some of the factors that affect the interest rates of a loan against property are the applicant’s profile, credit score, property value and documentation, loan amount and tenure. Pensioners must keep in mind that every financial institution has its own eligibility criteria. Applicants need to fulfil it to get their applications sanctioned quickly.
Certain financial institutions including NBFCs offer pre-approved offers for their valued customers. These offers expedite the application process which is beneficial for pensioners. To check their pre-approved offers, people can visit the lender’s official website and enter their name, age and other details.
To sum up, a loan against property for pensioners is a good funding option to deal with financial emergencies. Financial experts suggest checking monthly repayment obligations on EMI calculators because it helps to make informed decisions.
