Beneficial aspects like affordable mortgage loan interest rates, fast approvals, long repayment tenor, and more have made a mortgage loan or loan against property one of the most sought-after credit facilities. A LAP is a secured credit instrument that allows candidates to obtain high loan amounts by mortgaging their immovable or commercial assets. Borrowers looking forward to opting for a property mortgage loan must keep a few things in mind.
Now that you know what is mortgage loan means, let us move on to the points to consider while applying for a LAP in India.
Things to keep in mind while opting for a LAP
Borrowers should keep the following factors in mind while applying for a loan against property:
- Loan repayment tenor
The loan repayment tenor of the property mortgage loan plays a key factor in deciding the total payable interest. Candidates opting for a short repayment tenor have to pay higher monthly instalments. However, this lowers the full interest amount considerably. Financial institutions offer loan against property for a maximum tenor of 15-20 years. Prospective borrowers must choose the tenor based on their financial capabilities and goals.
- Mortgage loan interest rates
Lending institutions in India offer LAP on fixed and floating interest rates. As the name suggests, fixed interest rates remain unaffected by fluctuations in the market. However, floating interest rates tend to change with market fluctuations. Therefore, willing borrowers should choose the type of interest wisely to steer clear of credit default. Moreover, using an online mortgage loan EMI calculator, borrowers can check their monthly payouts beforehand.
- CIBIL score
The credit score helps lending partners assess a candidate’s repayment history and creditworthiness. An optimum CIBIL score of 750 or above is considered favourable for a loan against property in India. An applicant with a good credit score will get a high loan amount and easy loan approval. On the other hand, a borrower with a low credit score might get a low loan amount and at higher interest rates.
- Additional fees and charges
While calculating the total loan amount, one must consider the additional charges and fees the lender imposes. These additional fees include processing costs, service charges, prepayment and foreclosure charges, etc. Therefore, one must check the additional charges while choosing their lending partner.
- Processing and approval time
The total turnaround time of the loan processing and approval should ideally be very less. Hence, borrowers must check the timeline of the application procedure while choosing their lending institution. This will enable them to obtain the loan amount at the earliest in times of financial emergencies.
Eligibility criteria for a loan against property
An individual has to fulfil these eligibility parameters to opt for a LAP:
- He or she must be a resident of India
- The individual must be between 23 and 62 years of age for salaried borrowers and 25 and 75 years old for self-employed borrowers
- Working experience of at least three years in the private or public sector or any MNC (salaried borrowers)
- Proof of steady business (self-employed borrowers)
Further, here is a list of the documents required to apply for a loan against property in India:
- Address proof
- IT returns
- Original documents of the mortgaged property
- PAN card
- Identify proof
- Bank account statement for the last three months
- Salary slips
- Form 60 (for salaried individuals)
How to apply for a loan against property in India?
Borrowers can easily opt for this credit facility by following these simple steps:
Step 1: Visit the official portal of their preferred lending partner and click on loan against property option.
Step 2: Fill up the application form for LAP and produce the documents asked by the lender.
Step 3: After successfully completing the abovementioned steps, the lending partner will verify the documents and sanction the loan amount.
Leading financial institutions often provide pre-approved offers that reduce the total application procedure and lower the documentation time. Willing borrowers can check these offers by entering their names and contact details in the required section.
To summaries, low mortgage loan interest rates make it one of the best credit facilities in times of financial setbacks. Willing candidates use the mortgage loan calculator to get a clear idea of their monthly instalments and plan their expenses accordingly.