Gold is closely linked with many religious and cultural occasions in India. Most Indian households buy gold for various occasions, such as marriage, childbirth, festivals, and sometimes as an investment. Elders may pass down gold as family heirlooms, too. The gold you own does not have to sit in your lockers; you can unlock the power of your gold to help it fulfill your dream of buying a home of your choice. How? With the help of a gold loan.
A gold loan, also known as a loan against gold, is a secured loan. The borrower approaches a lender of their choice and borrows money against their gold ornaments or gold coins. The lender ascertains the value of the gold you want to pledge for the loan and sanctions a percentage of the gold value as a loan. The value of gold depends on the current rates and the purity of the gold used as collateral. Borrowers can use gold loans in India as per their requirements. You can use them to finance your home or your education or even a vacation.
If you want to buy a house, you would know that the cost usually runs in crores. As per guidelines issued by the Reserve Bank of India, lenders can sanction gold loans in India up to 90% of the gold value. This means that if the lender ascertains that the value of the gold you wish to pledge is Rs. 100,000, they will sanction a loan of maximum Rs. 90,000 (i.e., 90% of 100,000).
If you wish to buy a home only with the help of a gold loan, you would need an enormous amount of gold to get a loan equivalent to the value of a home.
Besides, lenders offer gold loans only for 2 to 3 years. So, borrowing the whole amount of the home’s cost against gold may not be viable as you would need to repay a huge amount within a short period, which could be challenging.
So, while buying a home, you should consider a gold loan a supplement to the home loan.
Despite many banks and NBFC offering home loans in India, buying your dream house can still be a challenge for the following reasons:
Banks do not offer 100% finance for a home. Home loans in India are sanctioned at a loan to value ratio ranging from 75% to 90%, which means that 100% finance is not available for buying a house; home buyers have to pay 10% to 25% of the house value upfront as a down payment for the house. Homebuyers need to save a considerable amount for a down payment.
Apart from the down payment, home buyers also need to pay charges like stamp duty and registration, which are not financed. When you buy any property, you have to pay them from your pocket.
The ever-increasing property prices also pose a challenge. You may save a considerable amount over the years; however, by the time you are ready to buy the home of your dreams, the prices may have gone up. This could result in you compromising on your choice or having to wait a little longer to buy a home.
So, how can a gold loan help overcome these hurdles? Let us understand with the help of an example.
Priya and Rohit had been saving for a home for almost five years. They found the home of their dreams, priced at Rs 40 lakhs. They had saved Rs. 700,000 for the down payment.
The bank they approached sanctioned a loan of 80%; they had to make a down payment of Rs 800,000 (20% of 40,00,000). Priya and Rohit were short of Rs. 100,000, they neither wanted to borrow from their family members nor did they want to lose their dream home.
Rohit's friend told him about the gold loan from indiagold and how it could help them get their dream house.
With a gold loan, just like Priya and Rohit, you can bridge any shortfalls that you may have despite a home loan and buy your dream house.
A gold loan from indiagold has the following benefits:
They offer loans at very competitive rates; interest rates start from 0.85% per month, which means 10.2% per annum. Low interest rates reduce your EMI burden.
The highest per gram rate gives you the maximum amount of loan for your gold when compared to other lenders.
indiagold offers loans without any processing fee, which can help you save money.
Documentation required for processing the gold loan is minimal, making the process user-friendly.
You are assured of getting a loan processed quickly; no waiting to get your loan sanctioned.
Currently, when most of us want to avail services from our home, this is a great advantage.
When you take a gold loan, you should consider the following aspects:
Borrow an amount that you can repay with ease, especially since you may have the home loan EMIs to pay as well. Choose a lender who gives you the maximum loan against your gold.
Lenders offer flexible repayment options for gold loans in India. Check the various options offered by lenders and choose one that suits you.
Choose a loan tenure that matches your repayment capacity, as you may have other EMIs to pay. Short tenure means higher EMIs, while a longer tenure increases the overall interest burden.
Research well and choose a home with a long-term view in mind. If for some reason, you fall short of funds, then indiagold can help you fulfill your dream. Let your gold work for you and get a loan from the comfort of your home on easy terms.