Rental Deposit Loans to Aid Easy Relocation

Being a millennial isn’t easy. No other generation has perhaps dealt with the rapid and drastic changes the millennial generation has been through. From coping with the giant advancement in technology to working through a pandemic, millennials have seen it all. The housing industry also witnessed tectonic changes in the past few decades. As millennials grew up watching their parents put in their life’s savings into buying homes, millennials have far more flexible and ingenious ways to live in the home of their dreams, renting being the top of the list. Most jobs these days demand that their employees be ready to work in different locations across the country, and sometimes the world. Owning a home everywhere you move to isn’t practical. Renting a home with all comforts makes the most sense for anybody. Given that renting a home can never be the same as owning it, changing times need us to have adaptable mindsets, and one has to admit that renting a home to enjoy certain things isn’t such a bad idea.

Now, imagine this - you have stumbled across the home of your dreams but for various reasons, you can only rent it for now. The home has all the elements you’ve ever wanted in your home. The perfect number of balconies, a great location, the right size for your family, and the sunlight falls inside the home just the way you like. You absolutely don’t let go of this opportunity to rent the home, except the rental deposit is way out of your budget. Relocating to a new city can take a toll on your bank balance. Especially in metro cities, most homeowners charge 10 months’ rent as a rental deposit. Negotiating with a landlord or personal loans may not seem ideal in all citations. So for a uniquely millennial problem, only an exclusively millennial solution can cut it - A rental Deposit Loan.

What is a rental deposit loan?

As the name suggests, a rental deposit loan is a loan amount exclusively borrowed from a financial institution to make the security deposit or advance on a home you are renting. The rental deposit loan can vary anywhere from Rs. 1 Lakh to Rs. 7 Lakhs depending on the city. The tenure of the loan is the same as your rental agreement and is in multiples of 11. Rental agreements are usually signed for 11, 22, or 33 months, and the loan tenure can last for the same duration.

A rental deposit loan is a huge relief for people who find it difficult to come up with huge sums of money alongside the financial strain of moving to a new place, especially considering that rental deposit loans charge just about 1.5 to 3 percent. For instance, if one borrows a rental deposit loan of Rs. 1 Lakh at 2% for an 11-month duration, then they are to pay Rs. 2000 as monthly interest and the total interest for eleven months will be Rs. 22,000. Rental deposit loans are ideal especially because the borrower only needs to pay the interest amount throughout their loan duration, and the principal amount can be repaid once the landlord returns the security deposit.

Advantages of rental deposit loan

1. A financial relief

Rental deposit loans are essentially no EMI loans and at very low-interest rates. When moving to a new city, one may need liquid funds for a lot of expenses. In such times, a rental deposit loan can be a huge weight off your shoulders without depleting your savings.

2. Short disbursement time

Most rental deposit loans take just about 24 hours for disbursement once all the formalities are completed.

3. Flexible tenures and plans

Most companies offer a flexible tenure of up to 36 months based on your capacity to repay. Rental deposit loans and flexi hybrid plans allow you to withdraw liquid cash as and when you need it from the sanctioned amount.

4. Pre-closure

Borrowers can pre-close their rental deposit loans after six months of sanctioning at a minimal foreclosure charge. Borrowers can also choose to make higher repayments after six months for faster loan closure.

Documents required for a rental deposit loan

Like all other loans, the borrower needs a set of documents to avail of a rental deposit loan. Identity Proof, employment proof, three months’ income proof, mail confirmation from official email ID, rental agreement, and six months’ bank statement are the basic set of documents one may need for processing their loan. The list will vary from one financial institution to the other.

Are you eligible for a rental deposit loan?

Only employees working for private firms or the government are eligible for rental deposit loans. That said, financial institutions have certain criteria that need to be matched when applying for such a loan:

1. A minimum monthly income of Rs. 30,000 is compulsory for most lending institutions offering rental deposit loans.

2. The borrower must either be an employee of a private company or should be in a government job.

Though owning a home is ideal and the safety that home ownership offers is undebatable, renting is necessary given the changing times. From moving to a new city to upgrading to a new home without the financial burden of a home loan, one may rent a home for various reasons. Whatever the reason, a rental deposit loan makes our lives easier and brings us closer to our dreams.