Home Banking Are Mortgage Loan EMIs Really Lesser Than Other Loans? Here Are The Facts

Are Mortgage Loan EMIs Really Lesser Than Other Loans? Here Are The Facts

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If you are a salaried or self-employed professional, Indian lenders offer you plenty of reasons to feel glad. When you have a stable income source, you can select any loan depending on your needs and purpose. Be it a loan against property, personal loan, home loan, auto loan, or business loan; you can choose anything you want.

Land mortgage loans are cheaper, more cost-effective, and simpler than most other loans provided by Indian lenders.

Are Land Mortgage Loan EMIs Lesser Than Other Loans?

A land mortgage loan offers several benefits you are unlikely to find with other loans. To avail of this loan, you need to pledge a commercial or residential property. The lender evaluates your mortgage loan eligibility and informs you about the loan amount and interest rate.

Here are the ways how you can reduce your monthly liabilities with a land mortgage loan.

Low Rates of Interest

The interest rate of a mortgage loan depends on the borrower’s eligibility. As a fact, land mortgage loan interest rates are some of the lowest you can get from a loan in India. However, the best rates are usually reserved for people with a high credit score and stable income. A credit score above 750, coupled with a high income, will increase your mortgage loan eligibility and you can avail the benefits of lower EMIs.

Diverse Interest Types

You can select either of two interest types to calculate the EMIs of a land mortgage loan – fixed or floating. In both types, the EMIs remain the same. However, when you select the fixed rate of interest, the rate remains the same through the loan term. In contrast, if you choose the floating rate, the interest rate may change when the RBI changes its base rate. The lender may modify the land mortgage loan tenure to adjust the rates. Hence, the appropriate interest type, coupled with low rates, can lead to substantial savings in the EMI amount.

Extended Tenure

While other loans, such as personal loans, provide a repayment term of five years, a land mortgage loan generally comes with a long repayment tenure of twenty years. When you select the highest term, your mortgage loan eligibility increases and you can pay affordable EMIs over an extended term. However, it is prudent to know that the longer the loan term, the higher the interest rate will be.

High Loan to Value 

Besides low interest rates, interest type, and extended tenure, a land mortgage loan also comes with a flexible loan to value or the maximum loan amount you can avail. If your property is well-maintained and in a proper location, you can expect up to 60% of the property value as a loan. However, the higher the loan amount, the higher the EMIs. Hence, try to use a land mortgage loan calculator to check your eligibility and select an affordable EMI amount. Alternatively, if your loan is on a floating type of interest, you can prepay a part of the principal as often as you can, without any prepayment penalty. Paying a lump sum reduces your EMI liability substantially.

Conclusion

With a land mortgage loan, you may pay the lowest EMI because lenders often offer ultra-low interest rates, diverse types of interest, a high loan amount, and longer loan term. Additionally, you can save more when you apply for a loan during promotional events. Hence, although mortgage loan EMIs depend on the borrower’s eligibility, they are often lower than other loans.

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