Name of loan against property
What is it?
It’s a loan taken against a property you own (self-occupied home or commercial). You need to mortgage (offer as collateral) this property.
• The interest rate is fixed for the first two years of the loan. The rate will range between 12% and 13% per annum and is based on your risk profile. After two years, the rate will become floating as it will get linked to the benchmark rate. So, your interest rate would depend on the overall rates after two years.
• It has a “Drop Down Facility”. This means that if you make regular EMI payments in the first 12 months, your interest rate will be reduced by 0.50%. If you continue being good for another six months, your interest rate will go down further by 0.25%.
Also Read | Other Offers (Graphics)
How does it help?
The incentive to get a lower rate will keep you on top of the payments. Offers from other lenders range between 11.95% and 17% per annum. So, Barclays’ rate looks attractive. You can even prepay the loan.
MONEY MATTERS TAKE
Currently, most lenders offer floating rates. Interest rates are expected to move up in the next few months, so the offer looks good. But before you go for it, you need to check on issues such as transaction ease and the benchmark that the bank will use to float the loan. Remember, you would be handing your property papers, so better be cautious.