Loans were taken against their homes & they didn’t even know. With the COVID-19 global outbreak and stipulation of lockdowns, the Indian Private Equity/Venture Capital (PE/VC) investments in 2020 are expected to be at $19-26 billion, a reduction of about 45 per cent -60 percent from the 2019 levels, says a survey by EY on the impact of pandemic.
Introduction
When we ordinarily think of a mortgage, the first images we picture are that of a car or a house. While these are the most common properties to be mortgaged, in this post, we discuss the nuances of the types of properties that you may be able to mortgage and discuss their repercussions.
What Constitutes a ‘Property’?
There are several acts with multiple definitions of the word property, such as Income Tax Act which includes property to be an interest in the immovable or movable property, the Sale of Goods Act, which delineates what goods would be properties and so on.
However, for ease and brevity, we can conclude that virtually anything of value – whether tangible assets (such as house, land, car, gadgets) or intangible assets (such as copyrights, trademarks) may be mortgaged.
You have to type your zone number, ward number and bill number online in Chennai Corporation property tax official website for property tax payment. Also, you can check for property tax status here.
Housing & Commercial Property
The Transfer of Property Act deals with the mortgaging of immovable property, which includes house, land, commercial property etc.
Although the intricacies of the mortgage are left to be decided by the contractual arrangement with your mortgagee (the person giving the loan, typically the bank or the financial institution), most lenders prescribe deposition of the property papers or handing over of other possessory documents such as inheritance certificates.
Your tax is calculated after applying all deductions. You can avail the help of a property tax calculator to check your tax payment.
The advantage associated with this kind of property mortgage is that you may still be able to sell your house and transfer the remaining outstanding loan to the person buying your house if the contract permits. In other cases, where there is a home loan taken on the same house, a premature payment may also be possible to clear outstanding dues and enable you to transfer, gift or sell the House Registration.
Land
Land lying vacant without any built-up property is also an ideal asset to be utilized by mortgaging it in return for a loan. It has generally been observed that property prices tend to increase, and therefore, the advantage that mortgaging land offers is – receipt of a loan as well as the appreciation of the land value at the end of the loan period. Like house property, land papers may be deposited and any construction in the interim period may require approvals from your lending institution.
Gold Coins & Jewellery
India holds more than 10 per cent of the gold stock of the world, making loans against the mortgage a rather viable alternative. While the legally correct usage for the mortgage of movable property is ‘pledging’, the effect is the same. It is not necessary for gold to be deposited in the form of coins, biscuits or bars.
Jewelry may also be mortgaged to the lender, which may be a bank offering loans against gold or a specific non-banking financial institution providing this facility. Since gold is easily tradable compared to the traditional house or landed property mortgages that require auctioning, the interest rate may be comparatively lower. However, most gold loans are for shorter durations, so it’s ideal to assess the requirement and your ability to repay before subscribing to a short-term gold loan. Online property tax payment can be viewed on the Tamil Nadu official Government website.
Other Movables – Can they be mortgaged?
We know that any type of mortgage involves substantial risk and therefore, a cushion is always required before going ahead with mortgaging. However, in the present time, there are newer forms of mortgage such as mortgaging expensive phones, vintage paintings of high value, diamond jewelry etc.
While these may still be valid and cost-effective at times, the exact modalities must be read into, more specifically, whether you can use them during the course of the mortgage, whether a premature payment is possible, and if so, if there is any penalty/premium involved, what would be the foreclosure mechanism. It’s also ideal to weigh all your property options and compare interest and tax rates accordingly.
Conclusion
We hope we have provided you with sufficient information regarding your concern; however, if you require additional assistance, please do not hesitate to leave a comment below.
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