If you’re short of funds and need money urgently, what are your options? One is a Mortgage Loan, also known as simply – Mortgage. It’s one of the easiest and most popular financing solutions available in the market.
Typically, mortgages are quickly approved and also have a lower interest rate.
What is a Mortgage Loan?
A Mortgage Loan is a secured loan where you place your residential & commercial property as collateral. The loan can be paid off in easy monthly instalments. Lenders typically prefer ready homes and commercial spaces with clear ownership titles in favour of the borrower. The repayment tenure can be up to 20 years.
The lender doesn’t put any binding restrictions on how a Mortgage Loan can be spent. This is why borrowers seek these loans for a variety of financial requirements such as home renovation, business expansion, medical emergencies, higher education of children, etc.
Benefits of Mortgage Loan
There are several benefits of a Mortgage Loan, which makes it popular with borrowers. Some of the top benefits of getting this type of loan are as follows:
- You remain the legal owner of the property you pledge.
- A mortgage loan is a secured loan and is approved more quickly.
- Mortgage loan interest rates are lower than personal loans.
Must Read: What is a Loan Against Property?
Documents Required for Mortgage Loan
For any loan, you will need to provide a set of common documents, which include identity proof, age proof, residence proof, and income proof. You will also need documents on the property you intend to mortgage for a Mortgage Loan.
Here is the list of required documents for a mortgage loan:
- Identity Proof: Aadhar Card, Driving License, Passport
- Residence Proof: Driving License, Utility Bills
- Income Proof: Salary Slips, ITR, Bank Statements
- Property Proof: Property ownership documents, Sales deed
7 Points to Keep in Mind While Applying for a Mortgage Loan
1. Loan Tenure
The tenure of the loan is the first point. Since Mortgage Loans are secured loans, lenders may typically offer a longer repayment tenure, which could be up to 20 years, based on the applicant’s age, income, and other eligibility criteria.
2. Loan Amount
The next point is the loan amount. Since loan providers have the security of a physical asset, a bigger loan amount can be offered, depending on the property value. Before this, however, the lender will conduct due diligence and evaluate the property’s value. Besides this, the applicant’s age, income, past payment history, and credit rating score will be taken into account before the loan is disbursed.
3. Interest Rate
The third thing that matters is the rate of interest. As mentioned earlier, Mortgage Loan interest rates are lower than those of unsecured loans. The more secure the loan, the lower the interest rates, and vice versa. Where the risk of monetary loss is low, lenders can afford to offer lower interest rates.
4. No Prepayment Penalty
Many lenders do not charge a pre-payment penalty if the mortgage loan is available in an individual capacity.
5. Processing Time
The fifth concerns the time taken in processing the loan. Unlike personal loans, which can be processed within days, the Mortgage Loan takes time because lenders need to carry out proper scrutiny of the property and its documents. An evaluation of the property’s worth is also done to determine its current market value. This due diligence ends up extending the total time for processing the loan.
Must Read: How to Secure a Loan against Property?
6. Eligibility
The sixth point is to look for a lender who can provide customized eligibility programs in order to offer the maximum loan amount. Such a lender should also be in a position to offer quality services after loan disbursal since the relationship could continue for up to 20 years. These services should include digital ones too, which can ensure convenience, speed, and a seamless experience.
7. Insurance Cover for the Loan Amount
Finally, the loan provider should also be able to offer extra protection via an insurance cover for the loan amount as a rider for the security of the borrower and his/her family to safeguard against any unforeseen or unfortunate event.
In essence, Loan against Property advantages includes lower interest rates, higher loan amount, greater flexibility, a longer tenure for repayment, insurance cover, and excellent post-disbursal services.
Conclusion
Hopefully, this article will have helped you get clarity about what a Mortgage Loan is. A Mortgage Loan will be approved promptly if the applicant provides the necessary documents. The loan amount can be spent to meet any kind of financial requirement.
