All you want to know about Loan against Fixed Deposit

As the name rightly suggests, loans against property are the credits secured against the Fixed deposits. It helps one to solve the problem of the financial crisis.
Eligibility of Loan against Fixed deposits:
All the fixed deposit holders can avail loan against FD
FD in the name of a minor and Investors of 5-year tax-saving fixed deposits does not qualify for this facility.
How does loans against FD works:
1. The amount of credit provided against fixed deposit by banks is 80% to 90% of the total fixed deposit value.
2. The interest rate charged on a loan of FD usually is in the range of 2% and 2.5%
3. Banks typically do not charge any kind of processing fees on loan against FD.
4. Repayment of the loans can be either lump sum or in instalments. But, the loan tenure should not exceed the duration of the Fixed Deposit held with the bank.
5. No penalty in case of foreclosure of the loan against FD.

Pros of loan against Fixed deposits:
1. It helps one to avoid the chance of closing the FD prematurely
2. The interest rates on loan against FD are lower than the personal loans.
3. Loans against FD can be availed against most FD.
4. The loan approval process of the loan against property is quick
5. There is no processing cost involved.

Read more: What is Loan against FD and its features and how does it works?

Is Long term Fixed Deposit Beneficial?

The long term Fixed deposits are investment vehicles which are deposited for a more extended period of time, usually for the period of more than two years to 10 years.

The rate of interest on long term FD is higher than the short term deposits.  The interest earned is most often just able to compensate for inflation during the tenure thus adding nothing to the actual wealth of an individual whereas the high rate of interest on long term FD allows one to create wealth. The Importance of saving money cannot be emphasised much, and life can take any turn at any time in a matter of seconds, to confront the unforeseen circumstance one must have a decent saving.
The long term tenure of the Fixed Deposit helps in creating a reasonable saving and creating wealth.
Further, it also provides the individual with an opportunity to deposit according to his requirement.

The long term investment is not just wealth creation but also about a rapport between the bank and the customer. When one commits his stake for a long-term, the banks consider his case before everyone else. There is mutual trust among the parties, and at the time when the person needs financial assistance, banks tend to favour.

Read more in Detail: Why Fixed Deposit Works For The Long Term?