A mortgage loan is a secured loan that has become quite popular due to its lower interest rates, flexible repayment tenor and no end-use restriction. It has become one of the most preferred financing options lately. However, before applying for this loan, one should have a clear understanding of the meaning of the mortgage loan, its purpose and eligibility criteria to make an informed decision.
Purpose of Availing of Mortgage Loan:
Home or property owners can pledge their property to get a high loan amount. The individual will get around 75–90% of the property value as the loan amount. So, the rest will have to be paid as a down payment. The loan is comparatively easier to get as the lender gets a property as a security.
When filling out an application for a house mortgage loan, it is necessary to provide a handful of financial information and documents. In addition, individuals willing to opt for this loan must have proper knowledge about its eligibility criteria and application process. The following sections provide detailed information on the subject.
Eligibility criteria of mortgage loans
Individuals can easily qualify for mortgage loans from reputed financial institutions as the eligibility terms are easy to fulfil. Therefore potential mortgage loan borrowers must check the eligibility criteria set by their preferred lending institutions. The requirements include the following:
For self-employed applicants:
- Must be an Indian citizen
- It is essential to maintain a steady income flow
- He/she should be between 25 years to 70 years of age.
For salaried applicants-
- He/she should hold an Indian citizenship
- Must be a professional individual employed with any private company, MNC, or public sector company for at least 3 years.
- An applicant must fall in the age range of 28 to 58 years.
List of documents needed to apply for a mortgage loan
To streamline the process of loan against property, the lender will require some extensive documents for both salaried and self-employed applicants. They are as follows:
- KYC documents that include PAN cards, Voter ID, passports, etc.
- Bank account statements for the previous three months and latest salary slips (for salaried individuals only)
- IT returns for salaried applicants and IT returns for self-employed documents
- Title documents
- Documents of the property to be mortgaged.
If the submitted documents are authentic and error-free, the financial institutions disburse the amount for a mortgage loan quickly.
Factors to check before opting for a mortgage loan
Now that individuals know about the meaning of the mortgage loan and its eligibility requirements, they can easily apply for it and fulfil their financial requirements.
Apart from knowing about the mortgage loan, one should be aware of several factors before applying for a loan against property:
Tenor
A repayment tenor is quite crucial as it influences loan repayment and loan affordability. For example, a short tenor will help make significant savings as it reduces the total interest payments. On the contrary, a long tenor will reduce the EMI but increase the interest outgo.
However, choosing between short- or long-term tenors depends on one’s individual financial abilities, necessities, and eligibility.
CIBIL score
CIBIL score is one of the many factors that affect loans against a property interest rate. It is essential to maintain a high credit score as an individual with a CIBIL score between 650 and 750 can get better interest rates on a mortgage loan. Applicants with a higher score get a higher opportunity for faster loan disbursal and processing.
Interest rate
The mortgage loan interest rate will affect the loan EMI amount and the interest outflow of your loan on an existing property. Therefore, applicants should always compare the available options before opting for a mortgage loan.
In some instances, many renowned financial institutions extend pre-approved offers that help in speeding up the application process. Such offers are applicable to different financial products like home loans. Individuals can check their pre-approved offers online by entering their name and contact details online.
A mortgage loan can be a suitable way to get funding at a comparatively lower interest rate. However, defaults in repayment give the lender the authority to take possession of the mortgaged property to recuperate the loss. In addition, it can adversely influence the credit score of an individual. Therefore, it is recommended that you thoroughly understand all associated conditions prior to opting for this loan.
