A lot of middle class families who have limited income source at some point in their life face a financial crisis where they are unable to meet an uncalled for need for lump sum money. This is despite their meticulous financial planning way ahead in life. And what should they be doing to meet this financial need. Here we put forth a discussion on it.
There can be a case when the family members may be employed and have their PF funds which is available for withdrawal given the early limit in terms of years of employment and also the conditions allowing partial withdrawal already being met. But should one mitigate this crisis with the employee provident fund i.e. though aimed at meeting financial requirements during your retirement years? Absolutely a no, as also, a EPF subscriber will also have to forego the interest earning on the corpus until he or she repays the loan.
In the event, what best you can do of the several options available during the highly competing environment is take up to any of the asset you possess such as home, gold etc. This is because the otherwise personal loans that though are easy to avail with good credit history and steady income source are rather expensive relatively. Also, if one is not having enough surplus, it shall be difficult to service the shorter tenure personal loan with high EMI amounts on time, further deteriorating your overall credit profile.
Thus, all and the best option, you have to gather a lump sum fund is to go in for a home equity loan. This loan is primarily extended against the appreciation in the value of your asset and can be even extended if there is a loan taken on it which is still outstanding for repayment. Also, for the sanction of such a loan, there should be a clear title to the asset and also it should not be an under-construction property.
If at all there is an outstanding loan on the home, the lender will grant 60-70% of the net value after deducting the outstanding loan amount from the actual market value as the loan amount.
So, with a longer tenure and probably lower EMI, you will be able to service the debt more immaculately without putting your PF corpus at stake.