Evaluate these options to fund wedding function
The expenses related to weddings are usually costly and sometimes all the saving is exhausted in making the event successful.
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Can a marriage loan help save your wedding? It has been generally witnessed that planning for wedding always witnesses rise in the budget. Sometimes it goes beyond budget and we are left with no choice than to borrow from other sources to fund the auspicious occasion.
There are umpteen sources from where one can borrow, but we need to think of interest rate charges, tenure and principal amount while going for a loan. Let us look at various options.
Personal loan
This type of loan usually comes in handy, when we need money for repairing our house, planning for vacation or preparing for child's marriage.
Your eligibility for opting this loan depends upon your employment type that is salaried or self-employed, your monthly income, your CIBIL score and your existing EMI etc. However, it is an unsecured loan thus the short term tenure plays key role in deciding the interest rate.
Loan against property
Banks and many other financial institutions provide loan against a property which can either be a residential/commercial building or a piece of land. For wedding loan against property can be availed by mortgaging the property with bank. Purposes like education, medical needs, property purchase, marriage or business can be fulfilled through this mode.
Loan amount depends upon factors like type of the property, their market value, etc. Usually banks disburse loan commanding about 40% to 60% of the actual market value.
Most of the loans against property depends upon the profession of a borrower like doctor, engineer, architect, chartered accountant and self-employed having business up to 3 years. Minimum age for such loan can be between 24 to 25 years of age.
Documents like validity proof of the residence, identity proof, salary slips of the previous 6 months, latest bank statement, copy of income tax returns and many more.
Which one is better for funding a wedding?
Firstly, the interest rate on loan against property is way lower compared to personal loans. As we know banks charge an interest rate for a personal loan between 18% and 24%, here interest for loan against property ranges from 12% to 14%.
This would mean that your EMIs would be lower on loan against property than personal loan.
In case, you have already mortgaged your property to a bank, then other option is to contact the financial institution to offer you a top-up or additional loan to fund your requirement. If a bank feels that your salary is sufficient enough to pay back this additional loan along with the EMI on the current loan against property, it can even provide a top-up loan to you.
Fee on the loan amount sanctioned against property is also low at 1% and can be taken for a tenure ranging up to 15 years or more. A borrower can choose from multiple EMI options to choose one which suits his repayment capacities.
As for personal loans, most lenders do not allow part payment of loans, this compels you end to up paying the loan for the entire tenure of the loan. Therefore, it turns out to be very expensive.