Mortgage loans are often considered the easiest loans to avail in India.
A mortgage loan is a secured loan against an asset. The asset can be a freehold residential or commercial property. It can also be against a plot of land.
Mortgage loans are approved quickly, and lenders provide extended repayment terms, thereby making the EMI extremely affordable. The following sections elaborate on the various features of mortgage loan in India to help you make the right decision when you need money.
What is a Mortgage Loan in India?
A mortgage loan refers to a loan against property. As the name suggests, you can apply for a mortgage loan in India if you own a freehold residential or commercial property.
The lender will verify your documents to determine your eligibility and evaluate your property to decide the loan amount. Your property papers will remain with the lender until you repay the loan in full. You can continue living in the property or use it for business. The property acts as a guarantee that the borrower will repay the loan on time.
What Are The Most Popular Types of Mortgage Loans in India?
Here are the four most popular mortgage loan types with the lowest interest rates in India:
- Simple Mortgage Loan – There is no change in property ownership in a simple mortgage loan. However, if the borrower fails to repay the loan, the lender may liquidate the asset.
- English Mortgage Loan – In this mortgage loan type, the borrower mentions the date by which they will repay the loan. After the lender agrees to the borrower’s proposal, they enter into an agreement. If the borrower fails to close the loan within that date, the lender sells the property to recover their dues.
- Usufructuary Mortgage Loan – Here, the lender passes the property ownership to the borrower for selling the asset. If the sale is with a profit, the lender takes away the gain until the loan is paid.
- Reverse Mortgage Loan – A reverse mortgage loan is the exact opposite of a simple mortgage loan in India. In a reverse mortgage, the lender pays a fixed amount to the borrower to convert money into equity.
What is the Eligibility For Availing Mortgage Loans in India?
Since mortgage loan is a secured loan, lenders’ risks are minimal. Hence, they provide relaxed eligibility criteria for availing of mortgage loans in India.
The top parameters Indian lenders consider while approving mortgage loans are:
- Age– The borrower’s age must be above 18 and below 55.
- Income – The borrower’s income must be above the threshold level set by the lender.
- Property Status – The property must be freehold and either residential or commercial. Alternatively, a borrower may use a plot of land to apply for a mortgage loanin India.
- Loan Amount– The loan amount must be below 60% of the property’s market value.
- Citizenship– You must be an Indian citizen to apply for a mortgage loan in India.
What is the Lowest Mortgage Loan Interest Rate in India?
Mortgage loan interest rates depend on the borrower’s credit score, monthly income, age, and property status. The lowest rates start from 7.75% and is reserved for borrowers with a credit score of 800 and above. A high credit score is a minimum necessity for getting the lowest mortgage loan interest rates in India.
However, if your credit score is low, you can still apply for a mortgage loan by paying a higher interest rate.
Which Documents Should You Submit to Get a Mortgage Loan in India?
Documents prove your eligibility for a mortgage loan in India. Generally, lenders require the following documents along with the loan application form:
- Age and identify proof
- Residence proof
- Income Statement
- Bank Account Statement
- Income Tax Returns
- Property Papers
- Processing Fee Cheque
How Can You Apply For a Mortgage Loan in India?
You can apply for mortgage loans in India in two broad ways.
The first and the most convenient mode is online. All you need to do is visit a lender’s website and enter your name, phone number, and email address to apply for a mortgage loan. The lender will call you and explain the steps.
If you are not comfortable with the online mode, you can also visit the lender’s branch and apply offline. After evaluating and verifying your loan application, the lender will send an officer to your property to verify the property status, location, and condition.
Once the loan officer feels satisfied, they will inform you of the loan amount and interest rate. If you agree to the officer’s proposal, the lender will transfer the money to your bank account.
Availing of a mortgage loan with the lowest interest rate is easy if you find the right lenders. Reputed lenders usually display all loan terms and conditions on their websites. Make sure to read them carefully before signing on the dotted line.