Loans are one of the voguish ways to fulfill all cash needs. Loans can be both secured and unsecured. Secured loans are those where you put your personal belongings in Bank, whereas unsecured loans are those where you need not put any personal belonging. Gold loans and Home loans are the two secured loans. For a gold loan, you have to initiate your gold ornaments in Bank, whereas for the Home loan, you need to put a property it can be residential or commercial.
Gold loans: The gold loan is not a new pattern in India. But this practice was first followed by unorganized lending sectors; now, it is also followed by organized lending sectors. The gold loan can be gained against gold ornaments and coins as well. A gold loan will provide you 75% of the gold value as a loan.
Home Loan: A home loan can be gained against residential and commercial properties. The home loans have a long tenancy of up to 20 years, with a loan amount up to 70% of the property’s market value. If your property value is high according to the market, then you can get a high amount loan.
Gold Loan vs. Home Loan
Following are some of the points that will help you to decide which type of loan you should go for:
Loan Tenancy: The tenancy of a gold loan is shorter than the home loan. The gold loan has a maximum tenancy of 3-5 years, but the home loan has a tenancy of 10-15 years.
ProcessingTime: When you are getting a gold loan, you can get it hand to hand, or it is almost an instant loan in some hours. And in gold loan document requirement is minimum. Whereas a home loan may take up to one week, and the document requirement is high. But if you are going to get a cheaper loan, then 7 days’ time period doesn’t matter.
Criteria of Eligibility: If you are going to get a loan, then you must be eligible for that. For gold loans, the eligibility criteria remain between 18-75 years. In addition, gold ornaments or coins are the requirements for a gold loan. On the other hand, for a home loan, the following criteria are considered- such as age, income, property value, existing debts (if any), constancy or continuity of a business, and credit history.
Processing Fee: When you get a loan, some amount of money is deducted from it, called a processing fee. The processing fee may be up to 2% of the loan amount; some financers don’t charge any processing fee. One of them is Manappuram Finance Ltd. For a home loan, the processing fee is 2% of the loan amount. This fee may vary from lender to lender, and terms and conditions may apply.
The Final Outcome:
Both the gold loan and home loan have their advantages. If one needs a small amount of money with a short tenancy, then gold loans are best. But if one wants a high amount of money with a long tenancy, you can go for a home loan.