Posted by The mortgage loan market in India looks optimistic, with the home loan segment alone having seen a 9.6% growth YoY (year-on-year) in the third quarter of FY21. These are secured loans where a borrowers’ properties are kept as collateral. Both home loans and loans against property are a type of mortgage loan.
Due to their secured nature, mortgage loan interest rates are relatively low. Moreover, they let people access funds without having to bequeath the ownership of their property. Given are some essential facts about mortgage loans.
What is a Mortgage Loan?
In a mortgage loan, a borrower must offer property as collateral to raise funds. A financial institution providing this loan has a legal claim over this property till the borrower fully repays all outstanding dues.
This loan is provided at certain interest rates based on the principal amount, which the borrower has to repay in equated monthly instalments (EMIs) within a particular period. If he/she defaults in their payments, the lending institution has every right to claim said property and auction it off.
People take mortgage loans to purchase a property like a home or a plot of land. Alternatively, they can take a loan against property to get funds to address their financial shortage or an emergency. You can use a mortgage home loan EMI calculator for financial planning to make your loan repayment easier.
Mortgage Loan Interest Rates
There are two types of interest rates for mortgage loans. These are:
- Fixed interest rate: In this, a borrower has to pay the same interest rate for the entire tenor. These are generally offered for loans with shorter tenor.
- Floating interest rate: Floating interest rates depend on the prevailing market rates and can change periodically depending on external benchmarks like repo rates. These let you get the benefits of changing interest rates.
Various factors that affect interest rates for mortgage loans include the applicant’s credit score, loan amount, tenor, property type and location. You can use a mortgage loan calculator to pick a loan with a suitable tenor, loan size and interest rate that you can comfortably repay.
Mortgage Loan Eligibility
The following factors determine if you can get a mortgage loan in India:
- Age: The minimum age needs to be above 21 years.
- Credit score: Applicants must have a minimum credit score of 750.
- Occupation: Borrowers must be salaried or self-employed with a regular source of income.
- Residential status: Applicants must be Indian citizens residing in the country.
How to Apply for a Mortgage Loan in India?
Follow the given steps to apply for a mortgage loan in India:
Step 1: Go to the website of your preferred financial institution and fill in the online application form.
Step 2: Attach all documents needed to apply for this loan.
Step 3: A representative of the financial institution will contact you to assist in the loan application process.
Step 4: Pay the processing fee to the NBFC.
Step 5: The NBFC will verify all submitted paperwork and may ask for face-to-face interaction.
Step 6: After a full verification, they will send an official loan sanction letter.
Step 7: If you accept the loan terms, you have to send an acceptance copy.
Step 8: After performing a legal and technical check of the property, the NBFC will finalise loan documents. The same procedure is for taking personal loans from NBFCs.
Step 9: Sign the loan agreement and pay the down payment.
Step 10: The financial institution will disburse the loan amount as per the agreement.
Many people apply for mortgage loans due to their easy approval system, affordable interest rates, and flexible tenors. These loans can be used to purchase a property or to get funds against one. In addition, they can continue to use the property while it is held as collateral.
Standard Mortgage Loan FAQs at a Glance
- What is mortgage loan?
A mortgage loan lets you get a large amount from a known lender. It is available when you pledge your property as collateral.
- How much loan amount can I get?
Applying for a mortgage loan can let you avail of an amount of up to Rs.5 crores as per your eligibility.
- Can I get faster loan approval and disbursement?
Yes. A mortgage loan approval can help you get the approval within 24 hours and funds disbursed to your bank account within just 72 hours.
- What is mortgage loan repayment term?
You don’t have to repay your mortgage loan faster and hurt your expenses by paying a large EMI amount. It is because it is possible to repay the loan over a flexible tenor of up to 18 years.
- Can I use the loan money as per my needs?
Yes. You are absolutely free to use the funds out of a mortgage loan for anything as per your needs. If the purposes for which you want to use the mortgage loan amount are legal purposes, then lenders don’t put any cap on how you utilize it.
- Is mortgage loan interest rate affordable?
Yes, a mortgage loan is secured because the loan is availed against the market value of your asset. Therefore, the mortgage loan interest rate is lower. You have now got questions to most commonly asked mortgage loan questions. You can now approach the application of the mortgage loan with ease.