Loan against home

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Loan against home
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Essentials of Loan against home and should you go
for it
Among a host of loan options provided by banks, a
relatively popular product is the Loan against
property or mortgage. The product clicks with
borrowers because it generally allows one to
borrow a relatively large sum of money for any
need. It generally has easy documentation, speedy
approvals and flexible repayment options.
According to the Transfer of Property Act,
1882, a mortgage, which is essentially availing a
loan against property is "the transfer of an
interest in specific immovable property for the
purpose of securing the payment of money advanced
or to be advanced by way of loan, and existing or
future debt or the performance of an engagement
which may give rise to a pecuniary liability.
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This means one can apply for a loan from a bank
by extending the property as a collateral or
security. However, as the definition states
mortgage only involves "transfer of interest" and
the ownership of the property remains with the
borrower. Ownership transfers to the bank only in
the event of default on the loan. Loan against
home or a mortgage is popular because it has some
perceptible benefits. Higher loan amounts are
generally available for longer tenure when
compared to conventional loans, and at a
discounted interest rate. Most banks accept both
residential and commercial properties for
mortgage.
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While people use Loan against home for education
and even to buy/build a second property, most
mortgage loans are taken for business purposes.
This is especially helpful if the business is in
need of emergency cash at lucrative interest
rates. It is always risky to put your property
at stake, especially if it's your house. This
form of loan is also not advisable if you are
starting up and there is a substantial amount of
risk involved in your business. Loan against
home should not be used as a form of risk
capital, but should be used when the borrower
knows he would be able to service the loan or
repay it before the stipulated period.  
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