Think of something you’ve always wanted to do — it could be starting a small business or buying a lavish house. Unfortunately, oftentimes, lack of funds makes turning dreams into reality harder than ever. In such a case, taking a mortgage loan may be a smart way to back your finances.
What is Mortgage Loan: An Overview
A mortgage loan, also known as a property loan or loan against property, is a secured loan sanctioned against an immovable property or asset. This may include a plot or land, commercial property, or a house. As a borrower, you have the option to keep the asset as collateral and avail of funds from the lender.
The fund you receive can then be utilized for various purposes – purchasing or renovating a house, funding a wedding or your child’s education, financing a new start-up or emergency medical expenses, or even taking a grand holiday. The lender will keep the asset as collateral till the time the entire loan amount is paid off.
Loan Against Property: Features & Benefits
Apart from the fact that a mortgage loan does not come with any restriction on usage, several other reasons make it one of the most popular loan options among borrowers. Here are the top features and benefits of a loan against property.
High Loan Amount
The loan amount is determined based on the current market value of the property. You can get a total amount ranging from 70%-75% of the loan-to-value (LTV) of the property that has been kept as a mortgage.
Mortgage loans offer a much longer payback period. The repayment tenor may extend up to 18 years, which allows the borrower ample time to plan the payoffs.
Attractive Rate of Interest
Interest rates offered on mortgage loans are usually low owing to their secured nature. Since such loans are backed by a high-value asset, the risk on the lender’s part gets reduced.
Because property loans come with a flexible repayment tenor, the monthly EMI to be paid tends to be low. You can also take advantage of a mortgage loan calculator to determine your monthly EMIs. A mortgage loan calculator is an online tool that makes calculations easy for the borrower and provides accurate results.
Under Section 37(1) and Section 24 of the Income Tax Act, 1961, you can avail of income tax benefits on mortgage loan interest rates.
Most lenders offer loan approval within 72 hours of applying for the same, given that all eligibility criteria are met.
Mortgage Loans: Eligibility Criteria
Eligibility criteria for mortgage loans may differ from one lender to another. However, listed below are the common qualifying standards that all borrowers must meet.
- Must be a citizen of India
- You should be between 33 and 58 years of age (for self-employed individuals, the age limit is 25 to 70 years)
- Should have a steady source of income
- You must be an employee at an MNC, or in the private or public sector, with minimum 3 years of experience
Before applying for a loan against a property, make sure you have gone through the eligibility criteria for a hassle-free experience.
How to Apply for Mortgage Loan
There are two ways of applying for a property loan. You can either visit the lender in person at the nearest branch, or you can simply visit the preferred lender’s website. The steps to applying online are as follows:
- Visit the ‘Mortgage Loan’ page on the online portal
- Check your eligibility
- Check out the list of documents needed to apply for the loan
- Enter all details and crosscheck every little information to avoid any errors
- Click on the ‘Apply Now’ to submit your loan application
- The lender will get in touch with you after thorough verification of all the details provided
- Once verified, you can expect to get the loan within 3-4 working days
The online application procedure is a faster and more convenient option as it allows you to apply for mortgage loans at any hour. Moreover, unlike in the case of a branch office, the customer care executives are available round-the-clock to resolve your queries, if any.
When sending across an application, make sure you understand what is a mortgage loan, and how it can help plan your finances. It is a good idea to stick to a loan amount that you are comfortable paying off at the end of the tenor. Also, be sure to compare different mortgage loan interest rates to get the best deal.