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Getting a Mortgage Loan in India-How to Apply

Getting a Mortgage Loan in India-How to Apply
A mortgage loan is a secured loan wherein the borrower offers their asset as a collateral to the lending institution. The asset is usually an immovable belonging such as a residential or commercial property. Since there is security involved, most lenders favour mortgage loans over unsecured loans. Also, as the interest rate is lower than that for a personal unsecured loan, you can usually raise a high amount by opting for a mortgage loan. However, in case the borrower defaults in repayment of the loan, the lender reserves the right to sell the mortgaged asset.

Funds from a mortgage loan can be used to meet various needs such as business expansion, emergency medical expenditure and tuition fees for an overseas education. In India, there are many types of mortgage loans and ways to avail them.

    Also Read: Your Guide To Tax Benefits On Loans Against Property

 

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What are the different types of Mortgage Loans in India?
  • Commercial Property Loan
    This is a type of business mortgage wherein you can mortgage your business property. Typically, lenders fund 70% to 75% of the value of the property.
     
  • Loan Against Property: Residential
    Under this, a residential property can be used as a collateral to raise funds for both personal and commercial needs.
     
  • Loan for Buying a Residential Property
    You can keep any asset as a mortgage to buy a new residential property.
     
  • Loan Under the Reverse Mortgage Scheme
    Under the reverse mortgage scheme, senior citizens can keep their property as mortgage to raise a loan amount. However, they will be able to retain the property in their name until throughout their lifetime.
     
  • Loan for Purchasing Land
    You may pledge an asset for buying a new plot of land for residential or commercial purposes.

    Also Read: 9 Questions To Ask Your Lender Before Applying For Mortgage Loan

    How to Apply for a Mortgage Loan?
     
  • Check eligibility requirements

    Following parameters typically influence the eligibility requirements. Make sure you check with the shortlisted lenders as whether you are eligible for the mortgage loan.

    Mortgage Loan Eligibility Requirements

    1. Age of the applicant
    2. Type of property to be mortgaged
    3. Residential status of the applicant
    4. End-use of the loan
    5. Tenure for which the loan is required
    6. Financial standing of the applicant
     
  • Check for competitive interest rates

    Educate yourself while you shop for the right loan against property with terms conducive for you. A lot differs as per your end requirements, term of the loan as well as other financial commitments. Dealing with lenders with whom you have had a past relationship with will greatly benefit you.

    Online marketplaces are the best way to make soft enquiries. Compare lenders and shortlist those who offer competitive interest rates. Make sure to check for hidden fees before you finalize on one. Use a mortgage loan EMI calculator to calculate the monthly instalments.
     
  • Usual documents required to submit

    1. A copy of documents of the property to be mortgaged. Ensure that the property is encumbrance-free
    2. Applicant's KYC documents
    3. Banks statements for the tenure as desired by the lender
    4. Keep your IT returns and income proof in place
     
  • Maintain a good credit score

    A healthy credit score is the magic ingredient for boosting your chances for negotiating for a better interest rate. Maintaining your financial hygiene like paying bills on time, clearing off pending dues or timely payment of EMIs will go a long way in managing your finances.

    Also Read: Loan Against Property For Businesses

    Conclusion

    A loan against property is a prudent choice for raising a high amount. It carries less risk, hence you can ask for a competitive interest rate as against an unsecured loan. However, bear in mind that in case of default, you may lose the title to the asset. Maintain the property in a good condition as it makes a difference while availing a loan against it.

    To sum up, it would be wise to carry out a cost-benefit analysis before you pledge your property for raising funds.
     


To Avail Loans Against Property
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Did You Know

Disbursement

The act of paying out money for any kind of transaction is known as disbursement. From a lending perspective this usual implies the transfer of the loan amount to the borrower. It may cover paying to operate a business, dividend payments, cash outflow etc. So if disbursements are more than revenues, then cash flow of an entity is negative, and may indicate possible insolvency.

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