A mortgage loan is a debt instrument. Normally, people take mortgage loans to purchase property like home, land etc. A mortgage loan helps you raise money so that you can make up for your financial shortage and also purchase what you want. Mortgage loan is a Secured Loan. The loan is secured on the borrower’s property. Going forward, the borrower needs to repay the loan as well as the interest amount on the loan within a particular period of time.
Mortgage Loan Eligibility
In order to get a mortgage loan, you need to fulfill certain minimum eligibility conditions. The following factors are considered while determining your eligibility for a mortgage loan:
- Your total annual income.
- Minimum age needs to be 21 years.
- If have any existing liabilities.
- Valuation of your property.
- Number of dependents you have.
- Your total work experience and experience in your current job.
- Financial documents.
- Both salaried and self-employed individuals are eligible to apply for mortgage loan.
Documentation required for a Mortgage Loan
The documents required for a salaried and self-employed individual differ slightly. A salaried individual needs to submit the following documents:
- A filled loan application form.
- A few passport size photographs.
- Proof of identity. As proof of identity you can submit voter card, driving license, PAN card, passport, employee ID card etc.
- Proof of address. Normally banks accept ration card, Aadhaar card, telephone bill, electricity bill, voter card and driving license as address proof.
- Your latest salary slips.
- Form 16 issued by your employer.
- Bank statements of last 6 months
- And a processing fee cheque.
A self-employed needs to submit the following documents:
- Application form.
- Recent passport size photograph.
- Identity proof.
- Proof of business existence.
- Proof of education qualifications.
- Certified financial statement for the last 3 years.
- Last 3 years income tax return certificate.
- Last 3 years profit and loss (P&L) statement.
- Last 6 months’ bank statement
- Processing fee.
Mortgage Loan Interest Rates
There are different types of interest rate applicable for mortgage loans in India. The most common types of interest rates sought after by the borrowers include fixed rate mortgage (FRM) and flexible or adjustable rate mortgage (ARM). In a fixed rate mortgage loan, you need to pay the same and fixed rate of interest for the whole tenure of your loan. You cannot opt for any change in the interest rate on your mortgage loan determined by your lender/bank, even if the interest rate rises and falls in the course of your tenure. Your monthly principal and interest payment don’t change. A fixed rate mortgage loan normally continues for terms like 15 year, 20 years and 30 years. A fixed-rate mortgage is also known as traditional mortgage loan.
Mortgage Loan Process
Once you decide to take a mortgage loan and approach your bank, the bank representatives will help you in documentation. After submitting all required documents, bank will verify those documents, and upon successful verification of your documents, you bank will approve your mortgage loan.
Normally, the followings steps involve in the whole process:
- Collection of necessary documents for loan processing.
- Credit appraisal by you bank.
- Loan sanction after proper credit check and verification of information.
- Sanction letter delivery at your doorstep along with a soft copy sent to your Email Id.
- Request for disbursal.
- Property documents collection by bank.
- Documents are legally examined.
- Upon successful verification, disbursement cheque is prepared and delivered.
Features and Benefits of Loan Mortgage loan:
A mortgage loan comes with the following attractive features and benefits:
- It is a cost effective way of borrowing. Normally, you can take a mortgage loan for a longer duration and pay off your repayment by using smaller monthly EMIs.
- Mortgage loans charge lower rates of interest on your borrowings than any other loans.
- Mortgage loan is a secured loan. It is secured against your property. The bank or lender has the right to repossess your property if you can’t repay your loan.
- A mortgage loan helps you buy your own house. You can afford to buy a home with the help of this loan and be the sole owner of your property once repayment is over.
- You can get loans against under construction property, fully constructed property, freehold residential and commercial properties for:
- Get loan for a longer tenure.
- Repay your loan with a simple repayment process through monthly instalments. You can pay it off by paying smaller monthly EMIs.
- Mortgage loans are offered at attractive interest rates.
- Enjoy an easy and hassle free documentation process.
- You can get a mortgage loan anywhere in India with integrated branch network provided by banks.
- You can choose from a number of interest rates to pay off your loan. They include – floating rates, fixed interest rates, interest-only mortgage and Payment option ARMs.
- Get access to a higher amount of funds.
- Mortgage loan can be sectioned even before your select your property.
- You can apply for it both online and offline and enjoy doorstep services.
- Both residential and commercial properties are accepted as collateral for mortgage loan.
- Funds received from a mortgage loans can be used for business as well as personal needs.
- Self –employed individuals get customized loan options.