What are the alternatives for home loan?


Hi… I recently took a home loan. But I just fell short of my financial needs. Can you please suggest any alternatives for home loan?


There are quite a few alternatives for home loan. Following a few options.

Loan Against PPF: If you have invested for more than 3 years in PPF, then you will be eligible for a loan against the amount deposited in your PPF account.
Loan Against Fixed Deposits: You can avail a loan amount of about 70% to 80% of the total value of your Fixed deposit.
Loan Against Securities: You can avail loans against certain securities such as NSC, KVP, life insurance policies, mutual funds and shares.
Bridge Loan: It is a short term loan that lends you money for down payment, to buy the new house, till the time your current house gets sold.

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You could go for a bridge loan. A bridge loan is essentially a short-term loan that gives you the money to make a down payment for your new house before you get the funds from the sale of your old house. Banks usually extend a one year window to their bridge loan customers to repay the amount. The eligibility and documentation requirements to avail this loan are similar to those of a regular Home Loan. Understand that banks offer bridge loans to customers only after entering into a formal agreement with them pertaining to the sale of the borrower’s property. In case there is no formal agreement to sell the existing property, banks usually offer a six month to one year window to sell the property and repay the loan. The maximum repayment tenure for bridge loans is two years.

The other alternative is loan against security. If you hold assets such as gold or land, you can consider a loan against security. The interest rates will be lower than that of a Personal Loan. You will also be diligent in repaying the Loan as your assets are at stake.

Personal Loans should be your last resort. This is because these loans come with high interest rates. Do looks for ones with lower processing fees and prepayment charges. If you are looking for a Personal Loan, click here.

BB Expert