Real estate can be profitable as an investment, but can you unlock the value of a self-occupied house? Here are some ways in which you can tap into your house to generate cash, when needed.
1. Home equity loan
WHAT FOR? : The borrower can use the loan against property for medical expenses, children’s education, marriage, starting a business, etc. It can only be taken against commercial or residential property.
HOW MUCH? : 50-65% of the current value of property.
TENURE:Up to 15 years.
INTEREST RATE:12-16%
2. Top-up home loan
WHAT FOR? : Not specified. It can be used for anything. One can take it from the same bank or a different one. One has to transfer the loan to another bank if one wants to take additional loan.
HOW MUCH? : Up to 70% of the property value, minus outstanding loan.
TENURE:Up to 20 years (age of the person is considered).
INTEREST RATE:its 50-200 basis points more than the existing home loan rate if one wants a top-up loan from the same bank.
3. Home improvement loan
WHAT FOR? :For internal and external repairs of a house and extension of the existing home by adding a storey.
HOW MUCH? : Up to 85% (for extension) and 85-100% of the cost of renovation.
TENURE: Up to 15 years.
INTEREST RATE: 11-14%
4. Home conversion loan
WHAT FOR? :It can be used to acquire another property by selling the existing one. An existing loan can also be transferred.
HOW MUCH? : Depends on the cost of the new property and your eligibility.
TENURE: Up to 20 years.
INTEREST RATE:Same as that for home loan.
5. Short-term bridging loan
WHAT FOR? :It’s a loan for the period between the sale of an old house and the purchase of a new one.
HOW MUCH? : 75-80 % of the cost of new property.
TENURE: 2 years
INTEREST RATE: 11-14%
6. Loan against rent receivables
WHAT FOR? : Not specified. The borrower can use the money for any purpose.
HOW MUCH? :55-80% of the net rent receivable over the lease period.
TENURE:10 years or the unexpired period of lease, whichever is less.
INTEREST RATE:13.25-14.5%
7. Property overdraft account
WHAT FOR? :Not specified. The money can be used for any purpose according to the borrower’s discretion.
HOW MUCH? :Up to 65% of the value of the property.
TENURE: 1-5 years
INTEREST RATE: 12-14%
8. Reverse mortgage
WHAT FOR? : One has the option of a monthly line of credit or lump sum, which can be used for any purpose. The only criterion is that the person should be above 60 years of age.
HOW MUCH? : 45-65% of the current value of property.
TENURE:15-20 years
INTEREST RATE: 11-13.5%