A mortgage loan is one of the most popular borrowing options in India. The primary reason behind it is that it is a secured advance and comes with high-value funding. However, individuals often carry different queries regarding this loan that necessitate a proper answer to pursue such funding.
A mortgage advance is a type of secured loan that individuals can avail by collateralising an immovable asset, such as a residential or commercial property. Being a secured loan, borrowers can draw a high-value amount by availing this loan. Further, one of the best features of this loan is that it comes with no end-use restriction.
The following are some of such queries that will assist borrowers in decoding this loan more clearly, helping them make their financial decisions accordingly.
For what purposes can you avail of mortgage loans?
A mortgage loan, such as property loans, comes with no end-use restrictions. It means that a borrower can use the credit for diverse purposes. However, one of the most common reasons for servicing this loan is house purchase.
Apart from that, one can also opt for a loan against property to finance higher education, medical emergencies, business expansion requirements, wedding expenses, etc.
What are pre-approved mortgage loans?
A pre-approved mortgage advance is a facility wherein the loan comes with a loan amount already approved as per a borrower’s eligibility. Such loan facilities are provided to existing customers of a concerned financial institution as such customers’ eligibility details and documents pre-exist with the lender.
It is an excellent funding option as a lot of time is saved, and the loan approval process becomes hassle-free.
However, to receive approval for a mortgage loan, you need to fulfill specific criteria that vary from lender to lender.
How to repay the mortgage loan before the allotted time?
Whenever a borrower opts for a mortgage loan or a loan against property, he/she needs to repay the principal amount and interest both via equated monthly installments. A borrower can thus choose a tenor of up to 20 years that makes EMIs affordable.
Nonetheless, when one has a surplus, he/she can opt for a mortgage loan prepayment facility. Several lenders offer part-prepayment as well as foreclosure facilities with nominal charges. It allows borrowers to get rid of loan debts quickly by repaying the entire loan amount or a part of it before the tenor’s end.
What are the differences between a fixed-rate mortgage and a variable rate mortgage?
A mortgage is a secured loan. An individual uses their residential property as a mortgage to avail credit as per the borrower’s eligibility and the value of the property mortgaged. Mortgage loan interest rates on a loan depend on how well the borrower is able to meet the eligibility criteria of the lender and his/her CIBIL score. A secured loan can be availed in two rates of interest – fixed interest rate and floating interest rate.
Property loan interest rates can be of generally two types, i.e., fixed rates and floating rate. As the name suggests, a mortgage loan with a fixed interest rate comes with an interest rate that remains unchanged throughout the repayment period. One of the merits of this rate is a borrower will know the EMI amount beforehand, and that will let him/her make financial planning accordingly.
On the other hand, in the case of mortgage floating interest rates, it varies with market trends. Thus, with an increase in interest rate, the EMIs increase, and vice versa.
How to calculate mortgage interest rates through EMI Calculator?
Mortgage loan EMI calculator helps you calculate the EMI amount payable towards your loan accurately. This online loan calculator will let you the amount of monthly loan EMIs. Therefore knowing the EMI is crucial for calculation of home loan eligibility and planning your home buying journey better. By including these three values -Loan amount, Tenor, and Rate of Interest you will be able to find the result.
Therefore knowing the EMI is crucial for calculation of home loan eligibility and planning your home buying journey better. Also, the EMI calculator can be used to know your monthly EMI based on your property loan amount, Interest rate, and loan tenure.
What are the documents required for a mortgage loan in India?
Just like any other loan approval process, documentation is necessary to determine the eligibility of a borrower for a mortgage advance. Following is the list of documents that you need to submit to get approved for a mortgage loan.
- Identity proof
- Address proof
- Bank account details for 6 previous months
- Copies of property documents
- Monthly credit outflow (for self-employed individuals)
- Salary slips and IT return (for salaried individuals)
Apart from producing these documents, borrowers also need to learn about how mortgage loan influence their CIBIL score. It will aid them to avail financing in the future with much ease.
What is mortgage loan insurance?
A mortgage loan insurance plan is a type of insurance cover for lenders against repayment default where the down payment during a property purchase is less than 20% of the loan amount. Similar to other insurance policies, this one also requires premium payment, wherein the premium amount varies between 0.5% and 3.75%. The premium amount is also affected by the down payment made. Due to this, the lenders often ask the borrowers for a higher down payment.
Furthermore, several top lending institutions offer mortgage loans with affordable interest rates and repayment structure. Via this loan, you can borrow up to Rs.3.5 crore at favorable terms.
Some of them also provide pre-approved offers that make loan processing hassle-free and prompt. These offers are available on several financial products, for example, home loans, loans against property, etc. To check your pre-approved loan offer, all you need to do is enter your phone number and name.
These are some of the factors to consider while taking a loan against property. Sound knowledge about different aspects of a mortgage loan will allow you to schedule your financial plans more adequately.