A mortgage loan is a credit instrument where an individual keeps an immovable asset as collateral with a lender to acquire funds. These immovable assets include commercial, residential as well as industrial property.
To better understand mortgage loans, individuals can refer to the following sections.
What is a mortgage loan?
The mortgage loan is popularly known as a loan against property in which borrowers pledge their immovable assets. In return, they receive a considerable amount of money from financial institutions or lenders at corresponding interest rates.
The mortgage loan interest rates that the lenders charge from the borrowers can vary from one financial institution to another.
How to apply for a mortgage loan?
Many individuals opt for loans against property to repay their existing debts by mortgaging their land to preferred lenders. So, it is essential for such borrowers to know how to apply for a mortgage loan.
Following the steps mentioned below, any individual will be able to apply for a mortgage loan successfully.
Step 1: After selecting a lender, the first and foremost step for the mortgage loan process will be to fill up the application form. Borrowers can fill up this form both offline and online, depending on the lender. In this application form, they need to provide details like:
1. Income information
2. Personal details
3. Loan requirements
4. Employment status
Step 2: After successfully applying for the mortgage loan, lenders will check the borrower’s eligibility. Individuals can qualify for a loan against property by meeting these simple eligibility criteria. Once the eligibility criteria are met, borrowers will be offered terms. In other cases, lenders may even instruct them to add a co-applicant to increase the chances of being eligible.
Step 3: Applicants need to provide certain documents while applying for a loan against property. They are:
1. Property documents
3. Income certificates
Step 4: When all the necessary documents are provided, the lenders will proceed to verify them. They can also send a representative to check the actual value of the property and its authenticity.
After successful verification, lenders will disburse the loan amount.
Individuals should note that they need to submit the original documents of the property, and the lender will keep them until full repayment of the loan amount.
Following these simple steps, individuals will be able to successfully apply for a loan against property.
They can also take the assistance of a mortgage loan calculator while applying to obtain a better understanding of the repayment schedule throughout the tenor. This can also help individuals to pay the EMIs punctually.
Benefits of loan against property
Due to its secured nature, a mortgage loan comes with several benefits that prospective borrowers can avail. They can find the benefits of a loan against property listed below.
- High loan amount
- Lower interest rate
- Longer tenor
- Easy-to-meet eligibility criteria
- Minimal documentation
Besides these benefits, leading financial institutions also extend pre-approved offers to eligible individuals. These offers are applicable on various financial products like loans against property, home loans, etc. Individuals can check their pre-approved offers simply by providing their names and contact information before acquiring a mortgage loan.
Usually, a mortgage loan tenor can be flexible, even up to 20 years. However, it depends on several factors like the applicant’s income, age, profile, credit score, etc. In this regard, individuals should also be aware of how their credit score affects their loan against property eligibility.
Borrowers also have the option to partially prepay the loan amount nominal charges in order to reduce the overall outgo. However, it varies from one lender to another.
So, mortgage loans can provide considerable funds to individuals at times of emergencies if they have a property to declare as collateral to the lenders. Knowing the steps to apply and its eligibility criteria will further help them to apply for one without a second thought.