There are moments in life when you can be unexpectedly met with unexpected expenses and urgently need money but not everybody has sufficient liquid cash available at all times. This happens because most people have investments in the form of mutual funds or stocks or property. Under stressful conditions, folks end up resorting to loans from banking or non-banking financial institutions like a loan against property or investments. Let’s see what all these mean and how they could prove beneficial for you. Here you will read about loan against securities vs loan against property: what are similarities and differences.
A loan against securities is taken against recorded investments like mutual funds, equity stocks, life insurance policies, etc.. It may be availed by people who urgently require fast liquid cash. Within this kind of loan, your investments are mortgaged from the loan and are held custody from the lending company, until the loan is repaid. It’s one of the greatest strategies to make your investments work harder and smarter for you.
What Exactly Are Loans Against Properties (LAP)?
A loan from property is a secured loan that’s sanctioned to you after keeping an asset you have as a mortgage with the lender. This asset may either by a possessed property, a home or some other industrial property in your name. This advantage remains as collateral with the lender before the loaned amount is repaid.
Below are some points that show the similarities and differences between the two loans to assist you opt for the better one among them.
Both loans belong in the bonded loans segment and require collaterals for acceptance. In LAP, you pledge a property that you have, whereas, in LAS, you pledge your investments like mutual funds. Life insurance policies or equity shares or bonds.
The tenure of a LAP is fixed by the lender. Most lenders provide tenures as long as 15 decades. On the flip side, in loan against securities, in the event you guarantee your stock exchange assets. Creditors can offer you a tenure as low as 1 year that you are able to extend by paying charges.
If you’re seeking an easy documentation procedure, you can opt for a loan against security. For these loans, lenders will request minimal documents like KYC, safety’s latest report along with the lien record. On the other hand, the files requirement list. To get a loan against property is quite lengthy and all records should be in proper condition.
Both loans have interest rates that are enormously different. While a loan against Property interest 12 percent — 15% per annum, a loan from property comes with 13% — 17%. A lower tenure on a loan against securities would indicate that you save a great deal of cash on interest payable.
Based on these points and assets that you own, you can decide what works best for you and go ahead and select one.
Here you will read about loan against securities vs loan against property: what are similarities and differences. You can read more about that in other blogs.