If A Home Loan Is Not Enough, Bridge The Gap With These Funding Options

Does your dream home cost more than your Home Loan eligibility? Should you let go of it and settle for the second best? No, why should you when you have alternate funding options available to you. Go ahead and bridge the gap between your Home Loan and the cost of your dream house with these funding options.

Personal Loans

The Personal Loan is one of the most popular products on the market. It has to be because of the following inherent advantages.

  • The lender does not ask any questions about the end use of funds while approving the facility
  • You do not have to give any collateral
  • The turnaround time is the fastest in the industry
  • It is a short-term loan
  • The loan does not require much documentation

The Personal Loan has its drawbacks in the form a high rate of interest as compared to other loans. You need to have a good credit score of around 650 and above to be eligible for a PersonalLoan. Nevertheless, Personal Loan is the best option to bridge the gap between your home loan and the cost of your dream home.

Use this tip to your advantage. Apply for Personal Loan before the Home Loan. When you apply for the Home Loan first, you might not be eligible for the Personal Loan. Applying for the Personal Loan first ensures that you get the best of both the deals.

If A Home Loan Is Not Enough, Bridge The Gap With These Funding Options

Gold Loans

Indians have a habit of stashing up gold in the form of jewelry. Gold is a fantastic asset with an ever-appreciating value. It is an effective way to get the necessary funding. You can liquidate gold by either selling it or by pledging it for a loan. Banks are also offering gold loans today. You get almost 70% to 80% of the present value of gold as the loan amount. Pledging your gold ornaments for bridging the gap is a good idea. These are short-term loans with the loan tenure between 12 to 36 months.

Loan Against Fixed Deposits

The loan against fixed deposits is very common in India. Indians attach a lot of importance to savings. This savings habit enables them to invest in bank fixed deposits. These fixed deposits come in handy when you look to bridge the gap between your Home Loan and the cost of your dream home. People can say that it is better to close these fixed deposits and raise money prematurely. However, taking a loan against these deposits is also a popular option. It encourages you to save and repay the loan as quickly as possible to release the fixed deposit from the bank’s lien. The rate of interest on a loan against the fixeddeposit receipt is 1% over the rate you get as interest on the fixed deposit.

Loan Against PPF

Investing in Public Provident Fund (PPF) is an excellent long-term investment. It is an extremely popular tax-saving investment for the average middle-class Indian. You can avail a loan against your PPF savings to the extent of 25% of the balance available at the end of the second year. Completion of seven years allows you to make a partial withdrawal from the PPF account.

Loan Against LIC Policies

Indians, being savings-oriented, love to invest in LIC policies. These LIC policies come handy when you need your funds urgently. You can get loans up to 90% of the surrender value of the LIC policies. You have to assign the LIC policy in the bank’s favor before you avail the loan. You can raise quick funds in this manner. The best aspect of this product is that you can keep on paying the premium and keep the life insurance in force.

Loans Against Securities

There are lots of investment options available in the form of equity shares, gold deposit certificates, equity mutual funds, T-bills, and so on. During an emergency, you can avail loans against these securities. The best part of these securities is that you continue earning your bonuses and dividends in spite of having availed loan against them.

We have seen 6 simple ways of raising funds to bridge the gap between the cost of your dream home and your Home Loan. All the options listed above have easy documentation formalities. Other than the Personal Loan, all the remaining options are loans against your investments. Taking a loan against your finances does not affect your credit score in any way. Therefore, they present the best opportunities for bridging the gap.

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