Mortgage loans is also like any other loan that we take in return for some kind of security. That is, if we take a loan by mortgaging a house or property, then it is called a mortgage loans. This loan is taken to buy or build a new house. The loan amount depends on its eligibility and the loan policy of the bank. The mortgage is also known as the Most Loan Against Property.
Types of mortgage:
Equitable mortgage or oral mortgage
In such a loan, Housing Finance Companies (Hf Cs) will check the property document and then the loan is signed by signing a loan agreement. There is no need to register a mortgage in such a loan. It is very common in India, but most of the companies demand property documents.
Registered mortgage
In such a loan, the mortgage is registered with the necessary authority. The charge on property is recorded in the government figures. The borrower usually also pays the registration charge.
Features of mortgage loan
This loan is given to the borrower. Generally 80 percent of the value of the property is given as a loan. In some cases it reaches 85–90 percent.
Repayment period:
Talk about the repayment period, it is known as the loan term. During this period the loan is repaid through EMI.
Mortgage Loans Interest Rate:
The interest that housing finance companies charge on a loan is counted as the interest rate.
Reducing balance:
The loan balance keeps decreasing daily, monthly and annually. The system of balances that decrease every year is now almost finished and now the balance decreases monthly.
Down payment:
To take a home loan, the borrower has to pay a fixed amount, which is called a down payment. The down payment can range from 10 percent to 20 percent.
Prepayment:
The customer can prepay the loan by repaying it ahead of time. Through prepayment, the customer can save interest by repaying the loan before the due date. Customers have the option of partial prepayment or full prepayment. Many housing finance companies also charge a nominal penalty on prepayment.
Mortgage Loans Fees:
This includes all other fees charged by housing finance companies. These fees can be charged at the time of filing the loan application. This includes administration fees, verification fees, legal charges, technical charges etc.
Repayment of Mortgage Loans :
The borrower has to pay monthly EMI during the loan period. This EMI consists of interest and principal repayment. In the first few years, the interest share is more than the EMI and later the principal amount is more than the EMI.
Loans have become a convenient financial solution for arranging money to meet any kind of need, whether it is a personal need or a professional one. Whether you want to buy a new house, or a car, or arrange for the money for your child’s education or to fulfill any other purpose, you can get a loan according to your need. There are many types of loans available in the market, such as personal loan, gold loan, wedding loan, etc., but many people are not aware of the loan that they get in exchange for property. Do you know what kind of loan it is? Let’s find out.
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What is a Mortgage loan against property?
As its name itself suggests, a loan against property, ie a loan in lieu of property, is a loan that is either owned by the applicant or its guarantor, which is usually owned by the parents. In return for the value of the property. This property is mortgaged, which means that the documents and legal ownership of the property remain with the bank until the loan is repaid.
Features of mortgage loan
Loan against property or mortgage loan has certain characteristics that are different from other types of loans.
- It is considered a secured loan as it is provided in exchange for the value of an immovable asset such as an asset.
- The purpose of this loan can be for both personal or commercial funding.
- The maximum amount of money received in exchange for a property is between 60% and 80% of the latest market value of that property. This ratio is called the ratio of loan to value.
- For loan against the property, the property should be in the name of you or your co-applicant. It can be a residential or commercial property, but commercial properties have to undergo more scrutiny and scrutiny.
- Interest rates are very low because the property is mortgaged as a loan. This reduces the risk of default in payment from the borrower.
- Banks provide the facility of a longer payment period, which can be up to 15 years.
- Vacant land as well as rented residential property can also be taken hostage for taking a loan.
Mortgage Loan eligibility
Although the main criterion for the loan is the property in the name of the applicant, most banks also ask for certain other eligibility requirements which are as follows:
- You must be a employed person
- The minimum age limit is 23 to 25 years and the maximum age for repaying the loan is limited to 65 to 70 years.
- Which ensures that you earn money to repay the loan
- Your financial status, credit score and income are also examined to determine your eligibility
.
Benefits of taking a Mortgage loan against property
Instead of taking a personal or gold loan, taking a loan against the property is a better option if you have a property. Following are some reasons why this type of loan is better for taking a large loan.
- You can use your property to take a loan without transferring your ownership
- Interest rates are much lower than personal loans
- Since the value of the property is quite high, you can get a much larger loan than a personal loan because in the case of a personal loan you get a loan based on your income.
- The time limit for repaying it is much longer, so you get a lot of time to repay it.
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Important Points before taking Mortgage Loans
Although money is easily available in a loan against property, but before applying for such a loan, you should keep in mind a few things which are the following –
- If the property is in the name of more than one person, then all people will have to play the role of joint borrowers or co-applicants.
- Lenders consider the market value of your property, its age and condition before determining the loan amount.
- When mortgaging the property for a loan, you cannot sell it before repaying the outstanding loan.
- In the event of default in repaying the loan, under the authorized jurisdiction, the lender has the right to seize your property, sell it and recover the remaining amount of the loan.
Do The Comparison
One should think a little about mortgaging your property and considering the options of lenders in the market nowadays, one should know and compare their options before finally choosing the lender. Different lenders offer different loan-value ratios, so try to choose the highest ratio to get the maximum loan. To avail the lowest rate and lowest EMI, also look at the interest rate.