A financial emergency can occur at any time. And to get immediate cash during such a situation, it is best to apply for a mortgage loan. Read on to know more about the steps to choose the right mortgage loan.
A mortgage loan is a type of secured loan in which you can obtain funds from a lender by keeping any property as collateral. Today, many banks in India offer mortgage loan. The best thing about this type of loan is that the interest rate is much lower than a personal loan. Also, you can avail a mortgage loan for a longer duration, which makes the EMI repayment affordable.
Know Key Steps To Choosing The Right Mortgage Loan
So, if you are looking to apply for a mortgage loan, you must first know about the eligibility criteria. Different lenders may have different requirements, but in general, most lenders in India decide the loan eligibility based on the following factors:
- You must be an Indian citizen
- You must be aged between 21 to 65 years at the time applying for the loan
- Annual/monthly income
- Valuation of the property
- Existing liabilities
Important things to consider while choosing the right mortgage loan
Before you start applying for a mortgage loan, you must evaluate certain factors, as mentioned below:
To avail a mortgage loan, you must pledge your residential or commercial property as collateral with the lender. The amount you get significantly depends on the lender’s evaluation of the property’s value. Typically, most lenders sanction up to 50% of the property value as loan. Some lenders may also sanction loan up to 60% of the property’s value for specific customers who already have an existing relationship with the lender.
This is one of the most important factors to consider while availing a mortgage loan. The interest rate has a significant impact on your repayment, and you must choose a lender that offers a loan at a competitive interest rate. The lenders generally decide the mortgage loan interest rate based on the type of property pledged and the loan amount. But, usually, the interest ranges from 10% to 11.25% for residential properties and 10.25% to 11.90% for commercial properties.
Apart from the interest paid on loan, borrowers must pay other charges like process fees, application fees, documentation charges, late payment penalty, prepayment charges, property inspection charges. Although the type of charges and the amount levied varies from lender to lender, you must consider these charges to calculate your overall loan cost.
A mortgage loan is a long-term loan. You must choose the duration carefully so that it is easier for you to repay the loan in smaller EMIs. Usually, lenders offer mortgage loan for 15 years. And the lenders determine the tenure based on customer profile, age, and repayment scheme opted by the borrower.
Steps to Apply for Mortgage Loan
Today, with most lenders in India offering online facilities, you can apply for a mortgage loan online from the comfort of your zone. To apply, you must visit the lender’s website, browse through the relevant loan section and choose the mortgage loan option and click on the apply now button.
The process may vary from lender to lender, but generally, it involves the following steps:
- Filling an application form along with the relevant KYC documents
- Credit appraisal by the lender
- Verification of the personal information provided in the application form
- Issuing a sanction letter
- Acceptance of sanction letter
- Verification of property-related documents
- Disbursal of the amount
Availing a mortgage loan is not as difficult as it may sound. You must do your research well about the lender, and read the loan documents carefully before signing it.