Gold Mortgage Loan Procedures, Advantages & Disadvantages

One can call the Gold as “Queen of mortgages”. Yes, because out of other form of loans gold loan is the easiest way to get instant money. If you have gold with you, it is as real as having hard cash in your hands and that is the reason why gold keeps glittering till today.


  • Unlike other document loans or security loans, the value of the gold can be checked and known within minutes. You carry gold in one hand to receive cash on the other hand instantly.
  • Including certain other banks, co-operative banks doesn’t even require you to be an existing account holder in their banks. In co-operative banks, you’ll have give just a copy of your ration card, with which you can get your membership within minutes to avail gold loan.
  • On can get loan amount upto Rs. 20,00,000 against gold. However, this figure differs from bank to bank similarly the loan amount differs and depends on the existing gold rate in market. For now, banks are providing loans up to Rs. 1,400.
  • Apart from banks, gold loan can be availed from pawn-brokers and individuals who are in financing.

Cautions & what you need to know

Banks will be charging about 0.56% as processing fee.

  • In banks, the gold can remain only for a certain period of time and has to be redeemed thereafter. But the same can be mortgaged again the very next day to sort out the situation.
  • Generally, if no interest or the principle amount is paid for 3 continuous years, the bank will send you a notice. This time duration might change from bank to bank. If the money is not repaid within given period of time, your gold or jewel may come for an auction.
  • Interest rates are high in private financial institutions. Certain private financing firms are charging a percentage of interest for the first 3 months and considerably much more higher interest from the fourth month onward. The worst part is that though the interest is hiked only after the 3rd month, some banks will grab higher interest calculating from the day one itself.
  • If the situation occurs to mortgage your gold in private banks, it is better to read the terms and conditions repeatedly until you are clear about it.
  • Keep it as a last option to go to pawn-brokers and individual financiers.

Tax Benefits!

There is no tax exemption for salary recipients on gold loan. However for business personnel the interest can be deducted from profit. Which means, the expense on interest can be shown in your business expense and take tax benefits.

It is good to keep the gold load proof and related letters safe for other benefits if any that may occur time to time.

Here is another benefit..!

Even though if you are ready to pay the rental for bank lockers, it is becoming tough to get a locker. Somehow, even if you get a locker, bank will not hold responsibility if your gold is lost from the locker. But for the mortgaged gold, bank holds whole responsibility until you redeem it. In case if any loss or theft the bank will pay you back the value. So, it is always good to get a loan instead of other ways of getting a loan.

Interest rates for gold loan from different banks.

State Bank of India 13.75% to 14.25%
Indian Bank 13.25% to 14.25%
ICICI Bank 14 to 15%
Indian Overseas Bank 14%
ING Vysya 12 to 13%
Canara Bank 14%
Karur Vysya Bank 13.75%
TNSC Bank 14%


  1. says

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  2. Israel says

    Banks have high interest rates and you might say your goodbye to your gold when it is out for auctions.

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