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Five things you need to know about a Mortgage Loan

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With increasing expenses, it’s becoming difficult for a common man to make both ends meet. However, one still needs to fulfil responsibilities and aspirations. To enable this, one prefers to avail loans. Mortgage loans have become popular over the years as they can be used for any purpose and are processed comparatively quickly. Mortgage loan refers to a sum of the amount borrowed against collateral, generally a self-owned property or real estate.

  1. Minimal mortgage loan eligibility:

Availing mortgage loan requires certain eligibility criteria to be followed-

  • Salaried employees and self-employed professional or non-professional can apply for this loan.
  • For salaried employees, the upper age limit is 60 years, and for self-employed folks, the age limit extends up to 65 years at the time when the loan matures.

Although certain financial institutions provide customized eligibility plans accordingly.

  1. Documents required:

The loan includes some paperwork, so collect the requisite documents and official papers beforehand to avoid any adversity during the time of applying.  Following are the documents required to apply for this loan:

Salaried Individuals

  1. Application form with photograph
  2. Education Qualification
  3. Form 16 for two years
  4. Latest salary slips of three months issued by the organization they are working under.
  5. Bank Account statements for the last six months.
  6. Aadhaar Card (alternative: PAN card)
  7. IT returns
  8. Copy of the document of the property which you’ll be using as collateral.
  9. Address proof (electricity bill etc.)

Self-employed Individuals

  1. Application form with photograph.
  2. Education Qualification
  3. Aadhaar card (alternative: PAN card)
  4. IT returns of the last three years attested by a Charted Accountant.
  5. Copy of the document of the property which you’ll be using as collateral.
  6. Address proof
  7. Bank account statements for the last 12 months.
  8. Certificate and proof of business existence.
  9. Interest Rate:

The interest rate is levied by financial institutions. If you are planning to apply for a mortgage loan, go for long tenure and low-interest rates. The rate of   hovers between 10.25% and 10.75%.

  1. of property:

One can either pledge residential property or commercial property or a plot of land to secure a mortgage loan. One’s residential property can even be rented out while being offered as mortgage as long as the borrower is the owner.

If the property is owned by multiple individuals, then all of them would have to jointly apply for the loan. After receiving a loan application, a financial institution would deploy an appraiser to evaluate the value of the property. Financial institutions tend to offer 40%-60% of the property’s value as a loan after considering the age and condition of the property.

  1. Loan Repayment:

Nowadays, numerous loan repayment methods, especially for mortgage loans, home loan, etc. are offered for Equated Monthly Instalments or EMIs. These instalments consist of payment of principal and interest through cheques and electronic clearance system. Various EMI calculators are available online to check for monthly instalments you would be paying. These calculators are useful as once you know the amount, you’d be paying every month, you can chalk out and manage your expenses and budget accordingly. The loan repayment tenure would be around 20 years.

Mortgage loans turn out to be useful when one is looking for a large loan amount at competitive interest rates. However, it is important for the prospective borrower to chalk out an ironclad repayment plan before applying for it.

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