Loans Against Life Insurance Policies: Details on Loan against policy, Offers, Documents, Insurance policies, loan amount and Interest Rates on life insurance policies. Apply for Loan against life insurance policies Online.
There are many banks providing home loans but loan will cover maximum 85% of your property value. Your dream house cannot be 100% funded by a home loan as Banks are not allowed to do so.
This is to serve two purposes. Firstly, 85% limit ensures that the person taking the loan has a significant risk in the house. Secondly, in case of fall in property prices, lender (viz. bank) has sufficient security against the loan. Although this will make it difficult for the borrowers with insufficient savings to make down payments though they are earning decent salaries.
It is possible to take another loan to cover the complete funding but then it has to be borne in mind payment of EMIs (Equal Monthly Installments) of both the loans. Study say that an individual’s EMI should not exceed 50-65% of his gross income.
Another point to remember is that a personal loan affects home loan repayment capacity. Mortgage lenders regard the loan eligibility based on the repayment capacity.
Income, age, qualifications, work experience, the number of dependents, job profile, spouse’s income (if any), assets, liabilities (which include personal loans), continuity of occupation and savings history are few elements considered while assessing the repayment capacity. So the alternate could be to borrow against liquid asset like life insurance as they come at a cheaper cost than personal loans and credit cards.
Infact this could prove to be the best option if the Insurance Company lends the amount. Then you could benefit in two ways, firstly, the low interest rate and secondly, convenient repayment schedule. But, one can borrow against an endowment policy only (not term policy or unit-linked plan). LIC allows one to borrow 90% of the surrender value of the policy on which an interest of 9% is to be paid half yearly.
Alternatively one can choose to deduct the loan amount at the time of claim payments. Or, a loan can be raised by pledging the insurance policy with a bank.
In both the cases, in the event of ones death, the benefits will repay the loan outstanding and any surplus left-over is paid to the nominees.