A mortgage loan is one of the easiest ways to raise funds by leveraging property equity. Besides meeting several long-term considerable financial obligations, this credit option lets borrowers generate additional income through strategic investments. Owing to this reason,
- The loan against property approval rates registered 21.1% growth in August 2020.
- The originations from new to credit consumers also grew 16.9% in the same period.
Therefore, individuals who possess property can collateralise it and utilise the funds for additional income generation.
Ways to use mortgage loan for additional income
Since a mortgage loan like a loan against property does not entail any end-use restriction, individuals can utilise it for various financial requirements. Hence, individuals looking for additional income options can also obtain this loan.
Following are the two of the best options to utilise this advance.
Individuals can invest a loan against property in a business, whether to expand or start. However, individuals who want to kickstart their entrepreneurship venture often struggle due to a lack of adequate funds. While several financiers offer a dedicated business loan for established business organisations, new start-ups often fail to meet the eligibility requirements.
In such cases, you can opt for a loan against property to start your business. With this mortgage loan, you can maintain a healthy cash flow and smooth day-to-day business operations. Some of the businesses or sectors performing strongly according to the current trends are:
- Supply chain
- Import and export
Irrespective of the sector, business acumen and access to substantial loan amounts can help expand your business. Moreover, since this loan is backed with a high-stake property, the mortgage loan interest rates are also economical. Thus, it does not add hefty financial liability when you are just starting a business.
Additionally, a loan against property also helps in consolidating existing debts so that you can free up more funds to invest in a business. Other than starting or expanding a business, you can also utilise a mortgage loan for different investment instruments.
Individuals looking for additional income streams can settle for different investment options. Higher returns require significant investments. However, individuals often lack enough surpluses for that purpose. In such cases, a loan against property proves beneficial. With a high-loan corpus, individuals can invest in various investment instruments such as –
- Mutual funds
- Personalised portfolio management services
Note that shares and mutual funds are subject to market risk. Therefore, you should assess the risk factor of these instruments individually before investing.
However, if you are looking for a more secure investment option, real estate can be ideal. You can collateralise your current property and invest in another property. The return in real estate investment comes in two ways – capital appreciation and rental. In either way, you can ensure additional income.
One of the factors that set apart this financing method to generate additional income sources is you can qualify for a loan against property by meeting simple eligibility criteria. Nonetheless, it’s essential to know the eligibility requirements when considering how to apply for a mortgage loan.
Select financiers provide pre-approved offers that expedite and simplify loan processing. Such offers are available on a range of financial products like a loan against property, home loan, etc. All you have to do is enter your name and contact number to check your pre-approved offer online.
Besides faster loan processing, a mortgage loan also accompanies several benefits that individuals need to know besides learning about what is a mortgage loan.
- This loan comes with a tenor of up to 20 years. It allows borrowers to repay the loan conveniently. They can also use an online mortgage loan calculator to select a suitable tenor.
- Individuals can also reduce the interest burden with the Flexi loan facility. This is because they need to pay interest only on the fund utilised.
- One can opt for a loan against property balance transfer facility and avail a high-value top-up loan.
- With select NBFCs, borrowers do not have to pay additional part-prepayment and foreclosure charges.
Hence, these are the most convenient and simplest ways to opt for a mortgage loan and utilise the funds for additional income generation. However, you should also calculate the additional tax liabilities associated with additional income sources.