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A mortgage loan is a type of secured loan where you can avail funds by providing your asset as collateral to the lender. This is a popular form of financing as it helps the borrower avail a high loan amount and prolonged repayment tenor.

A mortgage is usually a loan sanctioned against an immovable asset like a house or a commercial property.

The lender keeps the asset as collateral until the borrower repays the total loan amount. A mortgage is a debt instrument, secured by the collateral of specified real estate property, which the borrower is obliged to pay back with a predetermined set of payments.

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Mortage Calculator

Features of Mortgage Loan:

1. Quick Processing

It processes the loan within 72 hours of applying provided you fulfil of all eligibility criteria.

2. Simple Eligibility Criteria

Mortgage Loan eligibility is very simple. You have to be between 33 and 58 years of age if you are salaried and between 25 and 70 years if you are self-employed to apply for a loan. You need to have a stable source of income as well as a good credit history.

3. Limited Documents Requirement

You have to provide only a few documents including your KYC, address proof, documents of the property to be mortgaged, bank account statements, salary slips, and income tax returns to avail a mortgage loan.

4. High Financing

You can avail up to Rs.1 crore or Rs.3.5 crore if you are a salaried or self-employed individual, respectively.

5. Affordable Mortgage Loan Interest Rates

Mortgage loan rates are lower in comparison to unsecured loans, making it easier for you to repay.

6. Flexible Repayment Tenors

The repayment tenor for salaried individuals ranges from 2 to 20 years. For self-employed individuals, the tenor ranges from 2 to 18 years.

Below are the Different types of Mortgage Loans in India:

1. Loan against Property (LAP)

Loan against Property is commonly known as LAP. LAP is offered for commercial and residential properties. The borrowers have to mortgage their property in order to get funds from lending institutions. The original documents of the property have to be deposited with the lender till the time the loan is repaid in full. The repayment of such loans is done on EMI basis. Borrowers can use the loan amount for any personal or professional needs. Many banks and NBFCs provide an option to calculate loan against property EMI on their website. This is for the convenience of the borrowers. These loans usually have a tenure of up to 15 years.

2. Commercial Purchase

Commercial purchase loans are popularly taken by businessmen and entrepreneurs. They take such loans to buy commercial properties like a shop, office space, and commercial complex. This loan is apt for such purchases. The interest rates offered by banks and NBFCs are competitive. Funds from this loan have to be used to buy the property only.

3. Lease Rental Discounting

Leasing our own residential or commercial property is a very common practice. Mortgage loans can be taken against the leased properties too. This is known as ‘lease rental discounting’. The monthly rent amount itself is converted into EMI and the loan amount is given on that basis. The loan tenure and the loan amount, both depend on the tenure as to till when the property will be kept leased. The lease agreement is referred to by banks and NBFCs who are offering the loan.

4. Second Mortgage Loan

Banks and NBFCs offer Second Mortgage Loan for properties which are already under a loan. If a borrower purchases his property by taking a loan today, he can take an additional loan on the same property for personal needs. When a borrower applies for a Second Mortgage Loan, it is commonly called a top-up loan on a home loan. Based on the borrower’s credit score as well as loan repayment history, the lender will give additional required loan. The borrower has to start paying the EMI of the second mortgage loan along with the first mortgage home loan.

5. Reverse Mortgage

A reverse mortgage has been recently introduced in India. It is a special loan, which is introduced for senior citizens. There are many senior citizens who do not have a steady or an adequate monthly flow of income. However, many of them own real estate in some form or the other. So they can opt for this. A reverse mortgage works exactly the opposite of mortgage loans. The way it works is that they have to keep their property as a mortgage with the bank or with the NBFC. The lender then pays them a steady amount of income every month like EMIs. On the death of the senior citizen, the bank or the NBFC has the right to sell the property. The loan amount that is paid to the senior citizens is directly deducted from the amount in which the real estate is sold. The residual amount is given back to the legal heirs of the deceased senior citizens.

6. Home Loan

The most commonly sought after home loan in India is a home loan. Consumers apply for small, medium, and real big-sized home loans. This is because the interest rates are competitive, durations are comfortable, and one gets a tax benefit. One gets the opportunity to refurbish, renovate, and re-build their house. One can take a home loan for purchasing land to build a house or to construct a house on land that is purchased or to even buy an under-construction property. This can be done for new or resale properties. However, the funds that are taken as a loan by the borrower have to necessarily be used for the house only. Such funds cannot be used for any other personal or business needs.

7. Fixed-rate Mortgage

The borrower pays the same interest rate for the life of the loan. The monthly principal and interest payment never changes from the first mortgage payment to the last. If market interest rates rise, the borrower’s payment does not change. If interest rates drop significantly, the borrower may be able to secure that lower rate by refinancing the mortgage. A fixed-rate mortgage is also called a “traditional” mortgage.

8. Adjustable-rate Mortgage (ARM)

The interest rate is fixed for an initial term then fluctuates with market interest rates. The initial interest rate is often a below-market rate, which can make a mortgage more affordable in the short term but possibly less affordable long-term. If interest rates increase later, the borrower may not be able to afford the higher monthly payments. Interest rates could also decrease, making an ARM less expensive. In either case, the monthly payments are unpredictable after the initial term.
Advantages/Disadvantages of Mortgage Loan:

Advantages

  • A mortgage makes home ownership affordable
  • A mortgage is a cost-effective way of borrowing

Disadvantages

  • You’ll pay back A LOT MORE than you originally borrowed
  • Watch out for fees

Loan against Mortgages: Eligibility criteria

A. Salaried individuals

You can easily avail a Loan against Property the following criteria:

  • You should be between 33 to 58 years of age.
  • You should be a salaried employee in an MNC, a private company or the public sector.
  • You should be a resident of India.

B. Self-employed individuals

You are eligible for a Loan against Property for Self Employed with quick loan disbursal within 4 days if you meet the following criteria

  • You should be between 25 to 70 years of age.
  • You should be a self-employed individual with a regular source of income
  • You should be a resident of India residing in the following cities
Eligibility criteria Salaried individual Self-employed individual

Age of the borrower should be between

33 and 58 years
25 and 70 years

Employment status

Should be a salaried individual employed in a public sector company, private company, or an MNC

Should be self-employed having a regular source of income

Maximum loan tenor available

Flexible tenor between 2 and 20 years

Flexible tenor up to 18 years

Maximum loan amount of

Up to Rs.1 crore

Up to Rs. 3.5 crore

Loan against Mortgages: Documents required

A. Salaried individuals

  • Latest Salary Slips
  • Bank account statements of the previous 3 months
  • PAN card/Aadhaar card
  • Address proof
  • Copy of the documents of the property to be mortgaged
  • IT returns

B. Self-employed individuals

  • Bank account statements of the previous 6 months
  • PAN Card/Aadhaar Card
  • Address proof
  • Copy of the documents of the property to be mortgaged

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