Most people around the world have at least one dream in common, the dream of owning their own house. In India, buying a home is one of the biggest investments for a person who has to be planned carefully. Thanks to home loans provided by financial institutions, it is easy for people to fulfill their dream of living in their own house.
A mortgage loan or a home loan is a secured loan and is used by people to buy a property (real estate or house). The person taking the loan has to pledge the property they are buying as collateral security. In this case, if he fails to repay his loans, the lender can take over his security and sell it to get back the money.
Why Choose Mortgage Loans?
Mortgage loans provide low rates of interest and help you in increasing your credit score. When you take this loan, you do not have to repay the entire amount at once and have the option of paying it off in monthly installments, also known as EMIs. But the most important reason for choosing this loan is that mortgage loans can help you get your dream house. A house is one of the most expensive assets in India and to buy it, you need a lot of money. Most people do not have the required money with them, and they choose to take a home loan or a mortgage loan from banks or financial institutions. Both individuals and businesses can take mortgage loans to purchase real estate.
Repayment of Money View personal loan before the end of the tenure can be done on the Please note that in India, mortgage loans are not as popular as they are in the United States, Europe, Singapore, and other developed countries. For purchasing their dream homes, people in our country opt for a home loan. Lenders offer home loans for the purchase of properties in urban as well as rural areas.
Does Money View Provide Mortgage Loan?
At present, Money View does not offer mortgage or home loans. We only offer personal loans up to Rs 5,00,000 at attractive interest rates.
Types of Mortgage Loans
The different types of mortgage loans are as follows -
- Loan Against Property
In India, most banks and non banking financial companies (NBFCs) offer loans against property instead of traditional mortgage loans offered by banks in the US and Europe.
- Fixed Rate Mortgage
Here, your rate of interest on the loan is fixed during the initial years of your tenure.
- MCLR Pegged Mortgage
Here, your rate of interest is based on the MCLR rate. MCLR stands for Marginal Cost of Funds Based Lending Rate. It is the rate of below which banks are not permitted to lend money to the borrowers.
- Plot Loan
A plot loan is offered to those borrowers who only want to purchase a plot of land. It is not available for buying or constructing a house.
- Board Rate Mortgage
Board rate is the bank’s internal rate of interest system. In this type of loan, your rate of interest is based on the board rate.
- Combination of Fixed and Variable Rate Mortgage
Here, your interest rate is a combination of fixed and variable rates.
- Loan for Commercial Purchase
A loan for commercial purchase is offered to individuals and businesses looking to purchase a commercial property to expand their business. Shops, commercial complexes, office spaces etc. can be purchased with this loan.
Features and Benefits of a Mortgage Loan
A mortgage loan has many features and benefits. Some of them are -
- Rate of Interest
The rate of interest on a mortgage loan can be fixed or floating. A fixed-rate of interest is one where the interest is fixed and will not change during the initial years of the loan. A floating rate of interest is one where the interest can be changed by the bank.
- Loan-to-Value Ratio (LTV)
The loan-to-value ratio shows the amount of money you are borrowing against the value of the property you provide as security. Higher LTV means an expensive mortgage.
A lot of mortgage loans have their own incentives and special offers such as no fees.
A mortgage loan allows a person to repay the money in monthly instalments.
A borrower can repay this loan over a long period of time, which is usually 10 – 15 years.
Apart from the ones mentioned above, there are other features and benefits as well, such as prepayment, down payment, etc. The major benefit that a person gets from this loan is a chance to live in a house which belongs to him.
The features and benefits differ from bank to bank and a person should contact the lenders which provide this loan in India for more details.
Mortgage Loan Interest Rates
|Bank||Processing Fee||Interest Rate|
|PNB Housing Finance||1.00%||9.80%|
|Standard Chartered Bank||1.00%||10.10%|
|Union Bank of India||0.50%||11.50%|
|Karur Vysya Bank||0.50%||12.15%|
|Indian Overseas Bank||0.62%||10.85%|
|Dhan Laxmi Bank||1.50%||11.55%|
|Bank of India||1.00%||10.65%|
|IDFC First Bank||1.00%||11.80%|
|LIC Housing Finance||0.25%||11.30%|
|South Indian Bank||0.50%||10.70%|
|Lakshmi Vilas Bank||1.20%||11.65%|
|Central Bank of India||0.50%||11.10%|
|United Bank of India||1.00%||10.75%|
|Punjab and Sind Bank||1.00%||11.30%|
Please note that rates and processing fees given above are for informational purposes only and we do not guarantee their accuracy. We request you to contact the lender directly to know the interest rates and processing fees associated with their mortgage loan products.
Know the Eligibility Criteria Before Applying for a Mortgage Loan Features and Benefits of a Mortgage Loan
The 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. Some of them are -
Mortgage loans are offered to individuals aged 21 and above and not older than 65 years.
- Monthly Income
lenders prefer borrowers with a minimum monthly income of Rs. 40,000 if they are salaried and Rs 5 lakh per annum if they are self-employed.
- Total Debt Servicing Ratio (TDSR)
The Total Debt Servicing Ratio and Loan-to-Value Ratio (LTV) play an important role in deciding if you should get the loan or not. LTV can be between 50% and 70% depending on the type of property.
- Credit Score
lenders prefer borrowers with a good credit history and credit score of 650 and above.
The eligibility criteria differ from one lender to the other. Please approach the lenders directly to know about their existing eligibility criteria for mortgage loans.
Documents Required for Mortgage Loan Applicants
- Duly filled and signed copy of application form
- Proof of identity documents such as Passport, Aadhaar, PAN, Voter ID etc.
- Proof of address such as Aadhaar, Passport, Driver's License, Voter ID, etc.
- Form 16
- Salary slips for the last 6 months (for salaried applicants)
- Bank statements for the last 6 months
- Income Tax Return documents for the last 2 years (for self-employed applicants)
- Proof of business existence and certificate of business (For commercial borrowers).
Apart from the documents mentioned above, the 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 about the documents that you will need to submit along with your mortgage loan application.
Mortgage Loan Calculator
A mortgage loan calculator will help you calculate your overall eligibility for a mortgage loan and the maximum amount that you can borrow. You will need to enter a few personal information such as monthly income, total existing debt, etc., and based on the same the calculator can give you a fair idea of the maximum amount that you can borrow as a loan. This will help you to be better prepared and ensure that there are higher chances of your loan application getting approved by the lender.
How to use the Mortgage Loan Calculator?
The mortgage loan calculator can be accessed online and is easy to use. You will need to enter a few details such as the amount of loan, tenure, down payment, and rate of interest. After filling in the information asked by the calculator, you should click on the button that says ‘calculate’ and in no time you will get a detailed result. This result will include the EMI, amortization table, and balance loan and the amount of interest to be paid each month.
Difference Between Mortgage Amortization and Term
The difference between mortgage amortization and term is that amortization is the time you will take to repay the full loan and term is the period of time for which your rate of interest and mortgage agreement will be effective. The term is a part of the amortization.
Points to be Kept in Mind Before Going in for a Mortgage Loan
As with any loan, you would 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:
Although a mortgage loan may be available on a lower credit score, non-payment of EMIs regularly can further drag your score down.
Mortgage loans are big-ticket loans, so it may restrict your ability to avail loans in future.
If you do not pay back your loans on time, you may end up losing your mortgaged property.
If you are looking for smaller amounts of instant personal loans of up to Rs 5 lakh, you could consider applying with Money View. Loans are instantly disbursed in as early as 2 hrs and can be availed even with lower credit scores and a lower minimum income. Download the app or apply on the website today.
Frequently Asked Questions (FAQs)
- What will happen if I fail to pay my mortgage loan on time?
If you fail to pay your mortgage loan on time, the bank which provided you the loan will take over your collateral security.
- Can I repay my loan early?
Yes, you can prepay your mortgage loan, but some banks may charge a penalty for doing so. It depends on the bank if they will charge this penalty or not.
- Are there any extra fees and charges?
Yes, there are extra charges such as late payment charges, application charges, charge for changing loan periods, etc. You should ask for details about the same from the bank which is providing you the loan.
- I am self - employed, am I eligible for this loan?
The eligibility criteria are different for every bank. You should find out information on the same from the bank which is lending you the money.
- How many years will I get to repay the mortgage loan?
A mortgage loan is usually available with tenures ranging from 10 – 15 years. In some cases, the lenders may offer a longer tenure of 20 years to repay the loan. However, when you opt for a longer tenure to repay the loan you will end up paying more money as interest.