Homeowners or property owners looking for quick funds can mortgage their property to finance their necessities. Read more to understand mortgage loans, their features, types, and the best bank for mortgage loans.
A mortgage is a loan taken out against a property that you own. The property could be your home, a shop, or even non-agricultural land. A mortgage loan may be taken from any type of lender, from banks to non-banking finance companies.
The lender provides you with the principal amount and charges you interest on it and you can repay this amount in affordable monthly installments.
A mortgage is a secured loan and your property is used as collateral. It remains in the lender's custody until the loan is fully repaid, so the lender has a legitimate claim to the property for the duration of the loan.
In case you fail to repay the loan, the lender has the right to seize your property and sell it at auction to retrieve the loan amount.
Mortgage loans provide low rates of interest, help you get your dream house, and aid in increasing your credit score. Both individuals and businesses can take mortgage loans to purchase real estate.
In India, mortgage loans are not as popular as they are in other countries. Instead, Indians opt for a home loan.
The different types of mortgage loans are as follows -
Fixed-rate mortgages are offered to customers at a fixed interest rate. In these types of loans, the fixed interest rate can be used to calculate the monthly payment amount, giving the customer a fair sense of what his or her debt will be.
Variable-rate mortgage loans are loans that are offered at variable rates of interest. The interest rate of these loans depends on the base rate of the lender, the repo rate of RBI, the economy, and the stock market.
The interest rate is fixed for the initial period of the Adjustable-rate Mortgage loan. Thereafter, it changes depending on the state of the economy.
The higher the economy's performance, the lower this rate becomes. While banks offer a discount rate of interest for the initial period they charge a higher processing fee.
A simple mortgage loan is one where the property does not transfer from lender to borrower but the lender has the right to sell the borrower's property if he or she fails to pay back the loan.
Usufructuary mortgages allow the borrower to sell the property to the lender for an income that can then be used to compensate both principal and interest on the loan.
A subprime mortgage loan is extended to individuals with a low credit score, hence comes with a higher interest rate. The high rate of interest protects the lender in case the borrower defaults on the loan.
Under the English mortgage, the borrower consents to give the lender complete ownership of their property if they are unable to make their loan payments by a specific date. The property is again given to the borrower after the full sum has been paid.
Mortgage loan interest rates in India depend on the lender offering the loan. We have compiled a list of best banks for mortgage loans in India.
| Bank | Processing Fee | Interest Rate |
|---|---|---|
| ICICI Bank | 10.85% onwards | 1% |
| Indiabulls | 10.45% onwards | 1.25% onwards |
| Axis Bank | 10.50% onwards | 1.00% |
| PNB Housing Finance | 9.24% onwards | 0.75% |
| IndusInd Bank | 9.00% onwards | 2% |
| LIC Housing Finance | 9.70% onwards | 1% |
| Bajaj Finserv | 9% onwards | 3.54% |
| Kotak Mahindra Bank | 9.15% onwards | 1% |
| IIFL | 10.75% onwards | 2% |
| Tata Capital | 10.10% onwards | 1% |
| OBC | 0.50% | 10.95% |
| Union Bank of India | 0.50% | 11.50% |
| Karur Vysya Bank | 0.50% | 12.15% |
| HSBC Bank | 1.00% | 9.80% |
| Indian Overseas Bank | 0.62% | 10.85% |
Please note that the mortgage loan interest rates and processing fees given above are for informational purposes only. We request you to contact the lender directly to know the interest rates and processing fees associated with their mortgage loan products.
A mortgage loan has many features and benefits. Some of them are -
The mortgage loan eligibility criteria depend on the banks providing the mortgage loan. Banks decide who is eligible for the loan and who is not depending on many factors, such as -
Mortgage loans are offered to individuals aged 21 and above and not older than 65 years.
Lenders prefer borrowers with a minimum monthly income whether they are salaried or self-employed.
Most lenders only extend mortgage loans to Indian citizens.
Lenders prefer borrowers with a good credit history and a credit score of 750 and above. Borrowers with lower credit scores will incur higher interest rates.
Apart from the documents mentioned above, lenders might ask you for additional documents depending on their eligibility criteria, the loan amount, your overall profile, etc.
Please contact the lender directly to get an idea of the documents that you will need to submit along with your mortgage loan application.
As with any loan, you have to bear in mind that availing a loan is a liability that you have to pay back within the mentioned period. Some of the points that you would have to pay attention to are:
Mortgage loans are loans given against property and are secured in nature. These loans are cost-effective, customizable, and hassle-free. The mortgage loan amount has no restrictions on the end use and the borrower can use the funds as they deem fit.
At present, moneyview does not offer mortgages or home loans. We only offer instant personal loans up to Rs 5,00,000 at attractive interest rates.
The difference between mortgage amortization and the term is that amortization is the time you will take to repay the full loan, and the term is the period for which your rate of interest and mortgage agreement will be effective. The term is part of amortization.
Prepayment is allowed on mortgage loans. However, some banks charge a small fee for the pre-closure of the loan.
No. It is not mandatory to have a co-applicant. However, it has several benefits.
Co-signer/co-applicant requirements vary from one lender to another. Contact your lender to know who can be your co-signer on the mortgage.
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