A loan can aid in getting you through different financial crisis and sometimes facilitate financial growth. The product can be extremely important during certain stages of your life. However, you are often required to present a collateral as a security for most kinds of loans. Good news is that you may have several different investments at your disposal and these can used to secure a loan. Not only do these key investments help you easily get a loan, but they also bring you lower interest rates.
If about that investments that you can consider to be used as collateral, here are a few:
Fixed Deposits – Fixed deposits are a good investment option that you can use to get a loan. The rate of interest that you are offered for loan against term deposits is comparatively lower than that offered with standard loans. It is very simple to obtain a loan against fixed deposit. In addition to the fixed deposit certificates, you will have to submit documents of proof to complete the procedure.
Property – Property is one of the most common types of investments used as collateral to get a loan. Loan against property or Property mortgage loan can be obtained against any kind of property including land, your home or even commercial property. This type of loan gives you the opportunity to quickly receive a high value loan through minimal paper work. Your property essentially determines the amount of loan that you can obtain. Funds from a mortgage loan against property can be used for different purposes. However, you must note that in an event that you fail to make the loan repayment or default, the lender takes possession of your property.
Government bonds – There are different government bonds such deposits, mutual funds, equity shares and more that can help you obtain a loan. These type of investments can be used as collateral for your loans. The value of the loan that you can apply for will depend upon the total value of the government bond that you will use as a collateral.
Non-term life insurance – If you have insurance plans such as a money-bank plans or endowment insurance schemes, you can obtain a loan against the same. However, other types of insurance plans such as ULIPs may be not be eligible for use as collateral for loan. The value you can seek on the above stated life insurance plans depends on the surrender value of the insurance policy. Typically, it ranges from 60% to 90% of the surrender value.