An ideal solution for all financial problems
When people need money to meet an urgent need, the first thing they tend to consider is a loan. Many, however, find it difficult to decide which loan is best for them. While some concerns are warranted, financial experts say that a mortgage, also known as a home loan, is one of the most secured loans. It also carries a relatively lower interest rate compared to other options. More importantly, it allows the borrower to use the value blocked in their property as long as they continue to occupy it for the life of the loan.
What is the mortgage loan?
A mortgage is a loan whereby a borrower secures funds by pledging a property. With mortgages, the borrower is free to use the money as he wishes. There is no restriction on how the sanctioned money will be used. A borrower can use the fund for home related expenses or to meet personal or business needs.
Advantages of the mortgage
If a borrower has a good credit rating and is quick with EMI payments, there are hardly any lucrative options outside of the LAP. Here’s why:
Sanctions can be invoked by anyone
The mortgage is not only reserved for salaried individuals, but also sanctioned to the liberal professions and traders. In the case of a mortgage loan, the current value of the property as well as the borrower’s income determine eligibility for a mortgage loan. In addition, credit history and age also determine the loan amount and its repayment terms. To be able to claim a mortgage, the following elements are essential:
â Minimum age: 18 years old
â Maximum age: 70 years (when the loan matures)
â Type of resident: Indian resident
â Loan term: up to 18 years
Help to obtain a significant sanction
Based on a lender’s policies, a borrower is eligible for a mortgage of up to 70-75% of the current property. In addition, borrowers can also benefit from a typical long term (up to 18 years) allowed in a home loan.
Guarantees lower interest rates on mortgages
A mortgage loan usually has a lower interest rate than other forms of unsecured borrowing. Choosing to have fixed monthly repayments means that a borrower can use them accurately in planning and forecasting, allowing them to structure financial goals with more certainty.
Imposes no restrictions on end use
A mortgage allows you to comfortably manage all major expenses. A borrower can use the sanctioned fund through a loan against a property for any purpose including, but not limited to the following: marriage, debt consolidation, study abroad, and purchase of a home. House. Thanks to the significant penalty involved in a home loan, it can cover all these expenses in a transparent manner.
Implies simple documentation and rapid disbursement
Compared to other types of unsecured loans, a mortgage loan involves a less complicated documentation process and quick disbursement. In addition to completing the application form and providing valid proof of identity, income, and address, a loan applicant will need to submit property documents along with an appraisal report. It is to be noted that all applicants must ensure that all information provided in the documents is correct and complete. Failure to do so can result in rejection.
Allows balance transfer
The balance transfer facility allows a loan to be transferred from one account or lender to another, thereby eliminating high cost debt from the borrower. Based on the credibility and financial profile of the borrower, they can secure the most suitable loan available.
A loan balance transfer against a property facility allows a borrower to transfer the outstanding principal of an existing loan against one property to another at a lower mortgage interest rate. This significantly reduces IMEs and saves more on interest charges, thus reducing the total debt burden. In addition, you also have the opportunity to negotiate better loan terms with a more reliable lender.
How to Apply for a Mortgage
To apply online with a lender, a borrower needs to follow a few steps:
â Visit the official website of the lender and go to the Loan for Property section
â Before applying, the borrower must verify his eligibility for mortgage
â In addition to verifying eligibility, they should also verify other details including the interest rate and other charges
â If they are comfortable with the mortgage application, they can complete the application form and upload all the required documents.
Once the verification is completed, the lender should sanction the loan amount in about a week or less.
Top three tips for getting the best mortgage
Applying for a home loan can sometimes be a confusing and frustrating experience for potential borrowers. However, it does not have to be so. With the mortgage tips mentioned below in mind, an applicant can make the process easier.
âª Maintaining credit rating: CIBIL score affects the types of loans a borrower qualifies for, the amount of money that can be sanctioned, and mortgage interest rates. Therefore, it is prudent to keep track of your credit scores and ensure that they are ideally above 750+.
âª Understanding Mortgage Options: By knowing all of the mortgage loan options before applying, a borrower can ensure that the chosen lender is offering the best type of loan. The different types of mortgage loans are generally as follows:
o Real estate loan
o Loan against residential / commercial property
o Rent remission
âª Establish a budget. Use a mortgage calculator to figure out how much you can comfortably borrow and repay and stick to it.
The last word
Buying a property is a big purchase and a big decision. You have to take enough time and consider all the options. Educating yourself about the current market, financial requirements, and the overall mortgage process is essential so that a borrower knows what to expect.
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Posted on: Thursday November 18, 2021 1:56 PM IST