QUESTION:
How can I use my land title as an investment tool or to get a loan?
– Ackeem
FINANCIAL ADVISER:
A loan against property belongs to the secured-loan category where the borrower gives a guarantee by using his property as security. This is an effective way to use the millions of dollars being stored in your property to help you meet your financial needs and obligations and raise money for other productive purposes.
Financial institutions, including commercial banks and credit unions, will lend you money for business expansion, other business activities, education, and home improvement. They will lend for other purposes, too, but it is more prudent to use the valuable equity in your property to borrow to do productive things rather than for consumption if you want your property to really work for you.
The big advantage of a secured loan is that it is cheaper than an unsecured loan, and while it gives the lender protection in the event of your failure to service the debt satisfactorily, it puts you, the borrower, at risk of losing the property in the event that you are not able to abide by the terms of the loan agreement. You should therefore be careful in committing to give a lending institution a mortgage against your property.
The eligibility criteria will vary from one lending institution to another, but, from all the host of factors, there are common factors that they look at. These include your income, debt obligations, employment, the market value of the property, and your repayment track record for other loans, including credit cards.
To support the above, lending institutions generally require the following: a copy of each of the last three salary slips, or bank statements for the last 12 months if you are self-employed; a copy of your last utility bill (electricity, water, Internet or phone); the registered title of the property; a valuation of the property; surveyor’s ID report; and a credit report.
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