What is a Mortgage Loan?
Mortgage Loans are Home Loans that help people realise their dream of owning a house on monthly EMIs. If you want to purchase property, you can search for the right financial institution that offers a Mortgage Loan on the most flexible and beneficial terms.
Getting a Mortgage Loan means you don’t have to pay up the entire amount from your savings or your income; you borrow funds from a financial institute that charges you interest for the borrowed amount.
Mortgage Loans are generally secured loans offered on the payment of monthly EMIs. For example, the property you want to buy is for Rs. 30 Lakh, and you make a down payment of Rs. 5 Lakh. You can apply for a Mortgage Loan for the remaining Rs. 25 Lakh.
Money borrowed from the NBFC must be paid back with Mortgage Loan interest.
How do Mortgage Loans work?
Here are the steps taken to get a Mortgage Loan.
Step 1 – Check Your Eligibility
Make sure you meet the following requirements.
- You should be 21 years or above (but less than 70) and an Indian citizen to apply for a Home Loan.
- You can be salaried or self-employed with a steady monthly income, work experience of more than three years, and a stable source of earning
- Your credit rating should be high. Several NBFCs, look for a CIBIL score of more than 700 for Home Loan applications.
Step 2 – Mortgage Loan Interest Rate Charges
Financial institutions charge an annual interest on the amount borrowed, which is combined with the Principal amount and is paid out cumulatively through EMIs.
Look for NBFCs that charge a lower rate of interest on your home loans and negotiate to get a lower rate with your income capacity and repayment record.
Step 3 – Loan Amount, Tenure and EMIs
Check the amount you need, the number of years you want to apply for, and the amount of EMI you can afford each month.
For example, if you need a loan for Rs. 25 Lakh at an annual interest rate of 7.99% for 25 years, your monthly EMI would be Rs. 19,279
You can use a Home Loan EMI calculator to easily ascertain the EMI that you can afford each month.
Step 4 – Documentation
Keep your documentation strong, so you get a good deal on the rate of interest.
- A duly filled and signed Home Loan application with the latest pictures
- Age proof
- Residence proof
- Education qualifications
- Income proof
- Property documents like the title, the approved plan, etc.
Step 5 – Decide on The Type of Rate of Interest
Financial institutions generally apply either a fixed or floating interest rate on Home Loans.
As the name suggests, a fixed rate of interest means a constant rate that will be applied throughout the loan term. There is less risk in this.
Flexible interest means a rate that is dependent on market conditions and volatility.
Step 6 – Comparison of Financial Institutions
Different offers and deals are made by different NBFCs, based on your liabilities, employment history, credit history, income, and net worth. You must compare these offers made by multiple lenders and select the one with the best deal.
Don’t forget to go through the terms and conditions, closure disclosure form, associated fees, closing costs, and the blueprint before your sign the contract.
Step 7 – Apply Online
You can apply online for Mortgage Loans or visit the nearest branch to speak directly to a representative.
Step 8 – Get Approval
After the application, you need to wait for approval. The financial institution approves the loan application based on your eligibility criteria and the documentation submitted. Approvals are quick, and so are verifications.
Step 9 – Disbursal
After the approval, NBFCs process your loan within hours, directly in your account, with which you can buy your dream house and pay back the loan in easy and affordable EMIs.
With the advancement of technology, applying for Mortgage Loans and working has become extremely simple, convenient, and user-friendly. You can apply for Mortgage Loans in hours and get possession of your own house.