Many tax deductions can encourage more people to invest in houses. Here are the home loan tax benefits that you should know about. Tax benefit for interest paid on home loan A home loan is usually taken to purchase or construct a house. These home loans are repaid in the form of EMIs (Equated Monthly Installments) over a period of time. Every EMI has two components – the interest and the principal amount. A taxpayer can claim tax deductions on the total amount of interest paid in a single financial year. For a “self-occupied” property, the maximum limit for an income tax rebate is Rs. 2 lahks. Self-occupied properties are the ones where you live. However, there is no limit for properties bought on home loans and let out. Tax benefit for interest paid for property under construction This applies when the property you bought is under construction or has yet to begin. To be eligible for such tax deductions, the construction must be completed within 5 years of availing the loan. The Income Tax Act (ITA) allows people to gain tax benefits on such types of interest, known as “pre-construction interest.” The pre-construction interest is deducted yearly on top of the total interest paid. It is deducted in five equal Installments. It is eligible from when the property was acquired to when the construction was completed. Tax benefit on principal repayment Apart from the tax deduction on the interest paid, you can also claim tax benefits on the principal amount of the EMI paid in a year. This is mentioned in Section 80C of the Income Tax Act. The total tax rebate is capped at Rs. 1.5 lakh a year. This is mentioned in Section 80C of the Income Tax Act. The maximum rebate that you can receive is capped at Rs. 1.5 lakh. Here are the conditions under which you can avail tax deductions on the principal amount of your EMI: This benefit is only applicable after the construction period is over. Unlike the tax deduction on the interest paid, this is not allowed during construction. To be eligible for this, you must not sell the house within 5 years of buying it. If you sell it within 5 years of acquisition, the deductions will be added to your total income in the year of sale. Deduction for stamp duty and registration charges Stamp duty charges amount to a huge amount when buying a property. So does the registration charge. Under Section 80C of the Income Tax Act, you can also enjoy deductions on stamp duty and registration charges. It is eligible only for the year in which these amounts are paid. Extra tax benefits for first-time home buyers There are special housing loan tax benefits for first-time buyers. As per the provisions of Section 80EE, all first-time buyers are eligible for an additional tax deduction of up to Rs. 50,000. This is separate from the tax benefits on the interest and principal amount of the home loan EMIs. Therefore, this benefits people who want to buy their first home even more. Here are the conditions under which tax deductions on the first home loan interest can happen: The loan applicant should not own any other property at the time of loan application. The house for which the loan is being taken should be their first owned property. The worth of the property should not be over Rs. 50 lakhs. The loan amount granted should be Rs. 35 lakhs or less. Tax deductions for joint home loans If the home loan is taken jointly, each property's co-owners can claim a deduction for the interest paid and principal repayment. [B-02] Tax benefit on home loan for owning a second property If you take a home loan to own a second property, you are also eligible for tax deductions. The benefit depends on whether the property is considered self-occupied or lent-out. Under Section 24(b), tax benefit available on self-occupied property is capped at Rs. 2 lakh. There is no limit to lent-out properties.
Buying a home can be absolutely exciting. It is natural to lean towards a home loan to finance your home. However, it is recommended to find the best home loan available so that you can have the best experience. While considering the interest rate offered, the capital required, processing fee, and other charges, there are a few other aspects that you should consider. Here are some tips that you can use to have the best home loan experience. [B-01] Tips For The Best Home Loan Experience By following these home loan tips, you can have a seamless experience throughout the period of your home loan. 1. Check Your Credit Score: One of the most important aspects that a bank or lender will verify is your credit score. By analysing this score, they can gauge your creditworthiness. It is recommended to have a credit score of 750 or above. Having a high credit score can also fetch you other benefits such as a decreased rate of interest. If you would like to improve your credit score, you can do so by being timely with your credit bill payments, repaying a huge debt, etc. 2. Save For Your Down Payment: Depending on your bank or lending institution, the range of down payment may vary. Usually, it ranges between 2.25% and 20% of the price of the home you plan to purchase. While designing a monthly budget, make sure that you put away the required money for your down payment. 3. Keep Your Financial Documents In Place: During the home loan application process, you will be required to submit a list of documents. Make sure that you have these documents ready and in palace so that you can speed up the application process. Make sure that you have all the mandatory documents such as ID proof, address proof, bank statements, payslips, income tax returns, form-16, and others. 4. Compare Offers: Before you choose a home loan, make sure that you compare the available offers. A few banks may offer lesser interest rates along with other benefits. Compare these offers and pick a home loan that suits your needs the best. 5. Use a Home Loan Calculator: While making sure that the requirements for a home loan application process is ready, so is planning your repayment. Using a home loan calculator is considered to be one of the best home finance tips as it helps you plan your budget in a data-driven manner. 6. Understand Details About Your Interest Rates: The interest rate that is offered for your home loan plays an important role in determining the cost of your home loan. Discuss with your bank regarding your interest rate, be it a fixed or a floating interest rate. This can help you stay prepared and estimate your repayments. 7. Get Pre-Qualified: By having your home loan pre-qualified, you can speed up the entire application process and the verification process. To pre-qualify, you have to submit your financial information such as your income, savings, and investments along with your property documents. 8. Actively Respond To Your Lender: If you are contacted by your lender regarding any further requirements or requests, make sure that you respond quickly. This can help the lender keep your loan application active and move ahead with the process quickly. 9. Understand Different Loan Options: There are plenty of options available when it comes to buying home loans. For instance, you could either choose a fixed interest rate or a floating interest rate. Ensure that you check with your lender about all the available options. 10. Maintain Your Credit Habits Throughout The Process: In the middle of the home loan verification process, lenders may check your credit score. So, it is best to continue good financial habits even while your home loan is being processed. [B-02] In a Nutshell While opting for a home loan, it is important to understand all of its associated aspects. In addition, make sure that you plan your repayment schedule in advance so that you can financially prepare yourself. If you are looking to apply for a home loan, you can apply for one with Piramal Finance and experience several benefits including quick loan sanctions.
Most Indians resort to home loans as a means for owning their own home. These loans charge an interest rate over the principal and allow for long repayment terms. Home loan eligibility is one of the most common questions and concerns among prospective new home loan seekers. Lenders like banks and other non-banking financial companies (NBFC) take into account several factors before approving the loan and the amount. While certain aspects might vary from lender to lender, in general, the concepts and considerations are similar and typically include your credit history, past financial track record, current earnings and repayment capacity, among other aspects. It is important to understand these factors so as to get the best home loan possible. They are briefly described below. [B-01] Age Your age, especially your remaining earning age, is an important factor considered by lenders. The closer you get to the general age of retirement, the shorter the loan tenure tends to get, thus leading to higher EMI amounts. This is due to the perceived risk that your regular income stream is expected to end soon, and thus, your repayment capacity will be reduced. Hence, it is advisable not to delay getting home loans so as to reap the benefits of age and earning capacity. Salary / Earning Possibly the most important factor used to determine the borrowing limit for new home loans and consequential EMI amounts are your net monthly earnings. While different lenders may use different formulas and calculations, their main variable is your net monthly income. The focus is on net salary or take-home amount since most lenders do not consider mandatory deductions like PF, Gratuity, Pension Schemes etc. While a common consensus is that the approved amount is usually 70-80 times the net monthly salary, this is not a bona fide rule, other considerations are also part of the final calculation. Credit Score Your home loan eligibility is also dependent on your credit score. Due to the large amounts and long tenure, it is natural for the lending institutions to be risk-averse and aim to safeguard their loan. The credit score is like your financial report card and maintains a history of your previous credit repayments. This profiling helps the lenders factor in the risk cost and arrive at the final loan amount to be sanctioned. Most lenders prefer a minimum credit score of 750 or above. Repayment Capacity The net salary is an indicator of how much you earn presently. However, it may not necessarily be the optimum measurement of your repaying capacity. This can be due to existing loans or other monthly expenses / financial obligations. While securing a new home loan, the lenders will inquire about your monthly expenses to understand how much net income is left to repay the potential loan amount being considered. [B-02] In Summation As you must have learnt, there is a combination of factors that come together to determine the final approved loan amount. One needs to be mindful of these in order to secure the best home loan. Your home loan eligibility can be enhanced by following some best practices, like: Ensuring timely payment of credit cards and other bills to keep a healthy credit score. Keeping a clear record of your monthly income and expenses to ascertain your repayment capacity clearly. Choosing a restructured repayment plan so that your monthly EMIs are defined, and financial health can be maintained to avoid any defaulting or bouncing of cheques. Adding a family member as a co-applicant to increase your repayment ability and distribution of risk.
People spend decades of their lives working with the ambition of owning their own home and nurturing their families in it. Home loan is the most common tool which empowers people to accomplish this dream. With so many banks and other kinds of lending institutions offering home loans online, it is advisable to understand the different terminology associated with home loans. This ensures you are well aware of the concepts involved and can make an informed decision while choosing the ideal lender to partner in this journey. In the next section, we will inform you regarding the most common terms worth knowing about while securing a home loan. [B-01] List of Home Loan Terms Home Loan: This term in itself is an umbrella under which there can be several types. Let us quickly examine the most common types of home loans. Home Purchase Loan: Used for the purpose of purchasing a ready-to-move or under construction flat/apartment/home. Home Construction loan: Used for people who own land/plot or are looking to buy one and have their home constructed as per their plans. Home improvement loan: Used for renovating or making improvements, repairs to an existing property. Home extension loan: Used to undertake remodelling, additions of rooms, rebuilding or addition of floor to the existing property. Land Purchase Loan: Used to purchase a plot of land to construct your home. Such loans are usually taken by people looking to build farm-houses, bungalows and villas, and the plot serves as the collateral. Collateral/Security: Since the amounts borrowed are large and repayment duration is long, the lending financial institutions require some sort of security as assurance. In the case of home loans, this is in the form of the property in itself is considered collateral. In case of failure to repay the entire loan in a timely fashion, the lender holds the right to liquidate or sell off the property as re-compensation. Down Payment / Margin: Used interchangeably, this term means the upfront amount which needs to be paid to secure rights to the property. In other words, it is the difference between the overall price of the property being purchased and the loan availed. Some experts suggest the thumb rule of 80% loan and 20% down payment, but this is subject to the terms and conditions of the lender and the borrower’s credit history plus financial capacity. Credit Appraisal / Rating / Assessment: As mentioned in the previous point, the borrowing limit and associated terms and conditions are largely dependent on the borrower’s financial history. This comes under the term of Credit Assessment. Each lender needs to ensure that the likelihood of repayment of the loan is high and stable. To establish this, several factors are considered before the loan application and final amount is approved. Your home loan eligibility is highly dependent on this aspect. Loan to value ratio (LTV): This is a basic mathematical calculation under which the total loan amount is divided by the total value of the property. For example, for a property worth 50 Lakhs, if the loan taken is 30 Lakhs, then the LTV becomes 60%. EMI: Equated Monthly Installments (EMI) is the combination of principal + interest which is calculated as per the overall amount to be repaid and tenure to be repaid in. These EMIs need to be paid within the predetermined frequency and date to avoid additional charges and penalties. Pre-EMI: This term is prevalent mostly in regards to under-construction properties. Before the EMI payments begin, the borrower must pay the lender an interest rate on the partially disbursed amount for securing the rights to the said property. This is known as Pre-EMI. Fixed interest rate: As the name suggests, this means that the home loan needs to be paid at a fixed rate throughout the tenure, resulting in the same monthly installments and ease of calculation and future financial planning. Floating interest rate: Another way of determining the home loan interest rate is through the mechanism of floating interest. It fluctuates or floats as per the prevalent market conditions. This can result in different EMIs each month but can also be beneficial in the long run. [B-02] Conclusion: In the list discussed above, there would be some terms which the reader would be well versed with. But, it is recommended to understand each term and its implications to avoid any unpleasant surprises or having to pay charges that were not factored into your financial plan.
Financing your new home through EMI gives a sense of ownness. However, it may be a costly deal but a fair one too. With property rates rising with each passing day, the thought of buying a home through savings appears to be impossible. The most common way to buy a home is through a home loan. A home loan provides you with alternatives associated with the mode of repayment. One easy repayment mode is that of Equated Monthly Installments (EMIs). An Equated Monthly Installment (EMI) is a set sum paid by a lender to a borrower in exchange for taking out a loan. For home loans, there are two sorts of EMIs: full EMI and pre-EMI. You can choose the loan payback plan based on your financial stability. Read on to understand better about Pre EMI and Full EMI. [B-01] Understanding Pre EMI Monthly payments that simply comprise the interest component of your home loan are referred to as pre-EMI. You don’t pay anything towards the principal amount when you use Pre-EMI. When your house or apartment is being built, you will be given the option of paying Pre-EMIs. As a result, a Pre-EMI is a lower payment because it excludes the main component of the home loan. Your lender will urge you to pay the EMI in full after the construction of your property is completed. Remember that a Pre-EMI is not included in the term of the house loan. Its sole purpose is to relieve you of the load of development while your asset is in the works. Understanding Full EMI The usual home loan EMIs that you pay every month for your chosen tenor is referred to as full EMIs. It consists of both the interest and the main components. If you choose the Pre-EMI payment option, the full EMI payment will begin once the construction of your home or apartment is completed. Even if the loan for your under-construction home is still being disbursed in stages, some financial institutions allow you to start paying full EMI right away. Pre-EMI vs Full EMI The following principles will help you understand the Pre-EMI vs Full-EMI financing. Loan disbursals differ: It is that if you choose full EMI, you can get the complete loan amount disbursed; however, if you choose pre EMI, the loan amount is only partially disbursed. Interest rates differ: Because full EMI interest rates are calculated on the entire principal amount. The pre-EMI interest rate is determined using the loan amounts that have been disbursed. EMI payments: In the Pre-EMI option, monthly payments begin as soon as the building begins. The home loan EMIs for the Full-EMI option, on the other hand, do not begin until the property is completed and you have possession. Impact on loan components: Using the Full-EMI option to pay each monthly instalment reduces the principal amount and length of the loan. The EMIs paid through the Pre-EMI option, on the other hand, have no effect on the principal amount, loan payback term, or interest rate. Property resale: With Pre-EMI, the borrower will be able to sell the property shortly after it is completed or within a few years. Individuals who choose the Full-EMI option, on the other hand, will be unable to sell the property for a set length of time. Impact on finances: Paying an EMI through Pre-EMI can be less expensive because the borrower only has to pay interest during the pre-construction period, which is not the case with the Full-EMI option. Tax Considerations The tax effects are the same whether you pay Pre-EMI or Full EMI. Remember that you won’t be allowed to deduct interest on your house loan until the construction of your home is finished. When you get your possession certificate, the amount you paid in interest will be totalled and deducted from your taxes in five equal instalments. [B-02] The Bottom Line Opting for EMI as an option to repay your home loan is like having a key to your home’s door lock. EMI plays a vital role in a home loan. One should be well informed about Pre EMI and Full EMI to make a prudent decision while considering Home loan EMI. Consider either one of them as per your financial suitability.
Buying a home is the pinnacle of achievement for most Indians. It is the labor of their years of effort, sacrifices, and work. However, the modern Indian is more financially literate and savvy. Besides owning a home, many Indians have opted for real estate investing and even using business loans or other means to finance their ambitions. Let us look at some of the best cities in India to invest in real estate. This is a good time to invest in real estate. With significantly low interest rates being offered by most banks, additional interest relaxations for properties under 45L, several upcoming ‘smart cities’, and concessions being offered to developers for timely completion of projects, real estate investments are ripe for the plucking. While these might not be ideal for buying a property in metros or most Tier-1 cities, these are lucrative enough to opt for Tier-2 cities as your venue of choice. [B-01] Factors to Consider While Choosing the City While there are several considerations to be taken into account, some of the critical factors while selecting the city for investment are as follows: Employment Opportunities across sectors Healthcare Facilities Educational Institutions for diverse ages and specializations Mobility, Connectivity and Transportation Safety and Security Infrastructures, like roads, water and electricity Governance and socio-political stability Real estate price trends and future potential Top Cities for Real Estate Investment Keeping the above factors in mind, we take a quick look at 5 of the best cities in India for real estate investing, in no specific order. Navi Mumbai / ThaneWhile Mumbai might be the city of dreams, it is not necessarily known for affordable housing. The space crunch and massive population add to the woes of living in this metro. However, with its expanding borders spreading towards Navi Mumbai and Thane, the available properties are larger and far more affordable. Since these are newer areas, they can boast of well-planned societies offering the choicest of amenities. CoimbatoreCoimbatore is an already well-established industrial and education hub in Tamil Nadu. It is nicknamed the “Manchester of the South’ due to its textile industry. Lately, it has also started attracting automobile manufacturing and IT-enabled services sectors. This implies a lot of job and career opportunities, resulting in a large migrant population who will require housing and avail of other infrastructure that the city has to offer. With its affordable housing rates, investment in this city is expected to increase manifold shortly. IndoreRegularly winning the national award for the cleanest city in the country, Indore is the right mix of modern amenities with affordable surroundings. Situated in Madhya Pradesh, Indore is home to several businesses of different scales and a plethora of other facilities like education and healthcare. In fact, it is one of the few cities that has both an IIM and an IIT. Indore has the potential to provide rich returns on your investment in the next few years to come. VisakhapatnamVizag, as it is fondly known, is a major Indian port city located in Andhra Pradesh and is of strategic and economic importance to the nation. It boasts high educational standards and is one of the prototypes of the ‘smart city’ program. Following in the footsteps of its sister city, Hyderabad, Visakhapatnam has started attracting IT companies and workforce by the hordes. The great climate and lush greenery are added advantages to investing and/or residing in this city. ChandigarhReputed as one of India’s first and most well-planned cities, Chandigarh is highly regarded for its robust infrastructure and multi-connectivity options. Being a Union Territory, several tax and excise benefits can be availed here. With the new airport corridor, the surrounding areas of Mohali and Panchkula have also become rife with upcoming projects and high-rise housing societies. The lush greenery and beautiful backdrop of the Himalayas are an added bonus for a peaceful living environment. [B-02] In Summation While this list is just a guideline, you may choose any city for real estate investing based on your preferences. If you are looking for real estate financing or a business loan, visit the Piramal Finance (PCHF) website, which will help you in this endeavor.
A housing loan is one of the most common means of securing your own home. Through a combination of competitive rates, long repayment periods and higher borrowing limits, one can finally secure their dream home. While most people who take out a loan are well aware of the interest rates and amounts due, a smart borrower makes the effort to understand all the different types of home loan charges, whether big or small. This is important, especially while doing your due diligence, to choose the right lender to borrow from so that no hidden costs are discovered after the loan has been secured. In the next section, we take a look at some of the most common housing loan charges that you should be mindful of. [B-01] Types of Home Loan Charges Housing Loan Processing Fee Possibly the most important and obvious home loan charge is the Processing Fee. Some lending institutions might also refer to it as an Administrative Fee. It is usually a percentage of the entire loan amount, which is to be paid upfront for the administrative activities involved in procuring and verifying your loan-related documentation. It is worth noting that many banks and non-banking financial companies (NBFC) deem the Processing Fee as non-refundable. This implies that even if the loan gets rejected, the fee will not be returned. So, while choosing the right lender, keep this in your consideration. Administrative charges: While many financial institutions cover all administrative aspects under the umbrella of the Processing Fee, some others may segregate the two. In such cases, the Administrative Charges may be levied, which typically include the cost of verification of the property being considered for the loan. This may involve site visits, structural inspection, legal verification, etc. Most of the time, such work is outsourced or subcontracted to specialized agencies. Hence, this can be considered as pass-through cost. Some lenders might also apply a Login or Application Fee. This may be non-refundable or deducted from the overall charges on housing loan approval. Understanding the break-up and composition of processing and administrative fees is advisable while choosing your housing loan provider. Payment Charges: There are, typically, three kinds of charges that can fall under the Payment Charges bucket. Prepayment Charges: This type of home loan charge is also known as Foreclosure Charge or Pre Closure Charge. It is applicable if you pay off the full remaining housing loan before the end of the agreed upon tenure. There may be times when you would feel you have the financial capacity to repay the entire loan earlier than the original tenure and save on the subsequent interest. However, you should clearly understand the Prepayment Charges and then decide whether it is in your best interest to do so. Late Payment Charges: As the term implies, the Late Payment Charges are incurred when your monthly instalment payment (EMI) is delayed for any reason. To deter people from missing timely payments, the lending institutions levy fairly high penalties, ranging from 2% – 3% each month until the EMIs are paid up and synchronization of payment calendar is regained. Partial Prepayment Charges: While most floating-interest rate loans do not factor this in, you need to know if your particular loan scheme involves such charges. In the case you choose to clear a partial amount of your pending loan balance, you may incur the Partial Prepayment Charges. This will apply each time to make a partial payment and can pile up to a high additional cost. Conversion Charges: Some lenders might refer to it as a Switching Fee. It is levied when you wish to convert or switch from an existing rate scheme to another one. The most common examples include switching from a fixed rate to a floating rate interest scheme or vice versa. Sometimes, this conversion may also result in an alteration of the overall loan tenure. [B-02] In Summation As is evident, there are several charges involved in the process of securing a housing loan. While some of them have been listed above, there may be more that needs to be considered and compared before you choose the ideal lender to help you secure your dream home.
Pre-paying a housing loan is also known as pre closure or prepaid loan. It essentially means the early payment of the remaining loan amount before the date / tenure which was agreed upon during the loan contract signing. People may prepay loans either in part or in full. This is usually as a result of an unexpected windfall or reaching higher levels of earning, which gets the borrower to the situation of being able to clear off the housing loan before the agreed tenor. But while making this decision, it is worth deliberating certain other aspects or alternative viewpoints to be clear in thoughts and action. [B-01] Factors To Be Considered Before Pre-paying a Loan Prepayment or Pre Closure of the loan can lead to big savings due to the interest related expenses which would have been incurred. In case the housing loan is prepaid in early stages, these savings will easily outweigh any other considerations. Hence, loan preclosure in an early stage of the loan period is highly recommended. It is worth checking with your lender if there is any lock-in period involved in the loan contract. This would entail that the loan cannot be prepaid until that lock-in period is completed. Prepayment Charges are an important aspect which need to be considered as well. Banks and non-banking financial companies (NBFC) tend to charge a certain amount which may be 1.5%-3.5% of the loan amount. One may question why a penalty is being charged for earlier repayment of the loan, as the lender is getting their money back before time. Well, the answer is rather simple. The lending institutions make their projections and future investment plan based on the anticipated income through the interest amounts. With early closure of the housing loan, they regain the principal but lose out on the remaining interest, which means making some revisions to their business plans. You need to carefully calculate the amount you expect to save by early payment versus the prepayment charges and decide what seems beneficial to you. It is worth noting that as per the RBI mandate, prepayment charges are no longer applicable on loans with floating interest rates. In Summation Ideally, early repayment of loan whether in part or in full is a beneficial idea since it helps to save huge costs in the form of interest to be paid to the lender. It is extremely beneficial if done in the early stages of the loan tenure to provide the maximum savings. However, if you are at a late stage in the duration of your loan period, this decision is debatable. In such a scenario, you will need to consider the prepayment charges of your lender and then do the calculation whether the savings from interest outweigh the penalty charges or the other way round. Another aspect that may be considered is whether the amount you intend to give the lender for early repayment of the housing loan may be better invested in some financial tool. The returns on such an investment (like in equity-backed tools) may be far more superior to your anticipated savings. Having said that, do note that market returns can never be guaranteed to the frequent volatility of its nature. [B-02] Home loan also offers tax benefits in terms of deduction from the annual taxable income. These benefits will cease to exist after the loan repayment. This is also worth considering in your overall calculations, as it is easy to miss this point. So, it is recommended not to take any decision in haste. Read the loan terms and conditions carefully and invest some time in calculating, in detail, the projected savings versus the money being spent, including the prepayment charges and other penalties.
When it comes to loans, collateral is the most daunting term for people. The question seems very basic, but there always remains a lack of clarity about the various forms of properties and their applicability as collateral for a secured loan. The article you are about to read would bust all the myths and clarify the various types of properties accepted for a collateral and secured business loan. What is meant by – Collateral against Loan? Collateral can be an asset that the borrower pledges to the lender as security against the secured loan. It is a supporting medium for a loan transaction as the lender can liquidate it in case of any default in payment, and thus, it acts as a security against the amount being lent by the lender. For example, suppose you want to start a new business for which you plan to take a loan. Your lender would ask you to pledge any collateral like your property or some other kind of security like real estate, bonds, or government securities of the same or higher financial value. Further, once the lender does the assessment and is satisfied with the document, they will easily grant you the loan and fulfill your financial requirements. Various types of Collateral: Collaterals are generally classified as: – Immovable Property/Assets Liquid Assets Immovable Property/Assets are in the form of a house, residential building, or parcel of land. Liquid Assets are easily liquidated, such as Government securities, Bonds, Insurance, Fixed deposits, etc. People often believe that all forms of property qualify for a collateral loan, but this is not true. Read ahead to learn about the types of properties that are accepted for a secured loan. Types of Properties that are eligible to be collateral for the loan: Residential Properties: –The home you live in is rightly said to be your greatest asset. All residential properties qualify for a secured loan; it can be the house you live in, any residential apartment you have rented, or any other form of vacant residential property. Residential properties are the most preferred collateral for lenders, and the loan processes for these assets are highly streamlined. You can continue living in your home, and once you are done paying back all the outstanding loans, you can easily claim back the ownership rights of your residential property. A plot of land: Parcels of land in your ownership can also act as collateral, with the basic requirement of being properly demarcated for identification purposes. The rules regarding land ownership vary from state to state, so just as a matter of caution, refer to your state’s guidelines regarding land ownership. Also, the land you are pledging as collateral should not be agricultural land but free from ownership disputes. Commercial Properties: –Properties following certain specific municipality guidelines are designated as commercial properties. These properties are generally used by enterprises for commercial purposes other than residing. Commercial properties are also in high demand as collateral as they are of huge financial value, and lenders easily accept them as a security against any secured loan. For a commercial property to be eligible for a secured loan, you must check that no residential property falls in its vicinity as per the local municipal guidelines. Properties having more than one owner: –There is a lot of confusion regarding the eligibility of properties with multiple owners for a secured loan. A property having multiple owners can also be pledged as collateral against any secured loan, but only with a basic condition that the said property's ownership must be shared among the close family members, and there should not be any live ownership disputes. The relations preferred in this case are parents and children, siblings, mother-son, etc. Relationships like in-laws, friends, and other parties can also be considered based on the lender's guidelines. [B-02] To Summarize: If you are interested in collateral loans for housing finance or secured business loans for your start-ups, you can refer to various online portals. The most preferred one currently is Piramal Finance.