Mortgage Loans are loans granted to you against collaterals that are substantially valued – typically one’s property. These loans are secured in nature and offer benefits, such as sizeable loan sanctions, competitive interest rates, and extended repayment tenors.
In the case of a loan against property, the property ownership remains with the lender throughout the duration of the loan. Once you have repaid the loan with interest, the ownership transfers to you.
Mortgage loans can be a handy solution to many big-ticket expenses, such as buying a new house, bearing the costs of unforeseen medical bills, or even paying the tuition for your child’s overseas education.
When you seek a mortgage loan, you effectively receive the loan amount against the security of a property you have mortgaged as collateral. You can pledge a commercial or residential property and receive a sizeable sanction based on your property’s value and financial profile.
The mortgage loan sanction is repaid in the form of EMIs (equated monthly instalments) that have two components. The amount you repay at the end of closing your loan comprises of the following:
- The Principal Amount: This amount is your original loan ask and what the lender disburses into your account.
- The Loan Interest: This amount is the cost of borrowing the principal amount, usually charged per the compound interest format.
However, you may also prepay parts of your loan ahead of time or even foreclose your loan before your repayment tenor ends. If you are an individual borrower with a floating interest loan, you enjoy these privileges at zero additional costs – boosting the savings you make on your mortgage loan.
Also Read: Floating Interest Rate on a Loan Against Property
Step 1: Fill the Application Form
To begin the mortgage loan process, you need to complete an application form. Depending on the lender, this can be done either at a physical branch or online. Online options are typically more convenient.
The application form will typically require you to provide the following information:
1. Personal details
2. Employment details
3. Income information
4. Loan requirements
Step 2: Await Loan Processing:
After you have submitted the loan application form, the lender will review your eligibility for the mortgage loan. They may offer you terms based on your eligibility, or they might suggest adding a co-applicant to increase your eligibility.
Step 3: Document Submission:
Once the initial loan processing is complete, you will need to submit the required documents. Here is a general list of documents typically needed for loan processing:
1. KYC (Know Your Customer) documents
2. Property documents
3. Income documents
Step 4: Loan Verification:
Once you have submitted the documents, the lender will begin the verification process, which includes technical and legal checks. A property evaluation will be conducted to ensure the authenticity of the property's title. Based on these assessments, the lender will confirm loan approval.
At the final stage, the lender will provide a sanction letter, which confirms the approved terms of the loan. After receiving the sanction letter, you will be authorized to proceed with the loan disbursal based on the approved terms.
Factors you should evaluate before applying for a mortgage loan.
- Property Value: The approved amount is determined by the metric value of the property you want to mortgage. Other considerations also include the condition of the property.
- Interest rate: Availing of a mortgage loan with a competitive interest rate provides reasonable monthly payments as well as overall cost savings.
- Fees and charges: There are certain fees and charges that you need to take into account before availing of a mortgage loan.
- Long Tenor: Mortgage loans typically come with long repayment tenors of up to 17 years.
- Eligibility: The loan criteria vary depending on your type of employment, income, and age, among other variables. Always double-check the eligibility criteria before applying for loan.
Listed below are the popular types of mortgage loans that are available to interested borrowers in India.
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Home Loan:
A Housing Loan is a secured loan through which you borrow a sum to purchase a property from a developer, individual, or an entity. You may even receive a sanction to facilitate the repurchase of an old property. For new constructions, loans are offered for ready for possession properties and even ones that are under construction. -
Loan Against Commercial Property:
A Loan Against Commercial Property is a secured loan that allows you to mortgage your commercial property for a sizeable sum. The sanction can be used to address a variety of expenses as the amount comes with no end-use limitations. -
Loan Against Residential Property:
Similarly, a Loan Against Residential Property allows you to mortgage your residential property for a sizeable loan sanction with no restrictions on its end-use. -
Lease Rental Discounting:
Lease Rental Discounting is a credit tool sanctioned against income-producing commercial property.
Also Read: Types of Properties for Mortgage Loan
Following are some of the features and benefits of a mortgage loan.
Reasonable Rate of Interest:
Mortgage loan interest rates are typically competitive and reasonable. Lenders consider factors such as the borrower's credit score, income, and property value while determining the interest rate. Securing a mortgage loan with a favorable interest rate ensures manageable monthly repayments and overall cost savings.
High Value Funding:
Mortgage loans generally offer high-value funding, which means borrowers can finance a significant portion of the property's value through the loan.
Long Tenor :
Mortgage loans typically come with long repayment tenors, often ranging from 15 to 30 years. The extended repayment period helps in reducing the burden of high monthly installments.
Easy Balance Transfer with Top-up:
Mortgage loans often allow borrowers a Loan Against Property Balance Transfer facility to another lender offering better terms and interest rate.
Salaried Applicants
Nationality: Resident of India with property in the locations we operate
Age: 28 to 58 years**
Employment: Employed in private, public or MNC
Self-Employed Applicants
Nationality: Resident of India with property in the locations we operate
Age: 25 to 70 years**
Employment: Should demonstrate a steady source of income with required business vintage in the existing venture.
Mortgage FAQs
A mortgage is a special loan that helps people buy or take care of their homes, land, or other real estate. When someone gets a mortgage, they agree to pay back the money they borrowed over time, usually in regular payments. These payments are made up of two parts: the amount borrowed (called the principal) and an extra fee for borrowing the money (called interest). To make sure the lender gets their money back, the property being bought or maintained is used as security. The mortgage application goes through a thorough process where the lender checks if the borrower meets all the criteria. Once everything is approved, the closing phase takes place, and the mortgage is finalized.
A loan is a sum of money that a person borrows usually with the promise to pay it back after an agreed-upon time with interest. A mortgage is an agreement between a borrower and lender that gives the latter the right to sell the property if the borrower fails to repay their loan plus interest. Mortgage loans are secured loans given on an immovable property, like a house. Both home loans and loans against property are types of mortgage loans.
Borrowers can choose their family members as co-applicants for a mortgage loan. Only a few specific relations can be co-applicants. A father can be the co-applicant for his son or unmarried daughter. A brother can be a co-applicant if he intends to stay in the mortgaged property. A husband can be the co-applicant for his wife and vice versa. However, a sister cannot be the co-applicant for her brother or sister. Minors cannot be included as co-applicants as well.
