Many of you must have heard or read about mortgage loan at some time or the other, but do not have the correct information about it. Don't worry, in this article we will provide you all the information like what is mortgage loan and how to apply for it etc. Let us first know what is the meaning of mortgage?
What is a mortgage loan?
Mortgage or mortgage loan is a loan taken on property. In which a person mortgages his property to a financial institution and takes some amount as a loan on it and after paying the loan amount, gets back the ownership of his property. It is also called mortgage loan. Usually mortgage loan is taken by those people who buy a new house. They mortgage the documents of the newly purchased house with the financial institution and take a loan on the registry of the house.
Loan Against Property (LAP)
Loans against property are commonly known as LAP or ‘Loan Against Property’. LAP is offered for commercial and residential properties. Borrowers have to mortgage their property to obtain funds from lending institutions. The original documents of the property have to be deposited with the financial institution until the entire loan amount is repaid. The borrower can use the loan amount for any personal or business need.
This is another form of secured loan. Self-employed and business owners can avail this loan by pledging their property as collateral. It comes with a low interest rate as the sanctioned amount is determined based on the valuation of the property. Since the collateral is commercial or residential property, customers can avail a larger amount compared to other loan forms.
Commercial Purchase
Commercial purchase loans are usually taken by businessmen and entrepreneurs. They take such loans to buy properties like shops, office spaces and commercial complexes. The interest rates of this loan are different from other loans. The amount of this loan is used only for buying property.
Loan against house registry
Every person thinks of buying his own house in his life. But, the skyrocketing prices of properties often make it challenging to bear the entire expense. In such a situation, taking a loan against property is a good option. Nowadays there are many such financial institutions from where you can easily get a loan at affordable interest. For a loan, the borrower has to mortgage the registry of his house with the financial institution, which is returned to him after repayment of the loan.
What is the interest rate of mortgage loan
The interest rate is an important part for any type of loan. It plays a major role in determining the repayable amount. Therefore, it is important to analyze what the interest rate is going to be for your mortgage loan. Let's understand what is the interest rate of a mortgage loan.
Along with this, it is also important to choose a reliable lender. Hero FinCorp offers you affordable interest rates on mortgage loans. However, the cost of the property also affects the interest rate of the mortgage loan.
Who can take a mortgage loan?
For mortgage loans, different financial institutions have set different eligibility criteria. Some of the most common criteria are listed below.
- You must be a resident of India
- Your age should be minimum 25 years and maximum 75 years
- If you are self-employed, you must be in the same business for at least three years
How much loan amount is available on mortgage?
The amount you get can be anywhere between Rs 20 lakh and Rs 8 crore depending on the market value of your property and other eligibility factors. When you opt for a mortgage loan with Hero FinCorp, you can get a mortgage loan amount of up to 75% of the total cost of the property.
The value of different forms of property varies. Commercial property is usually more expensive than residential real estate. As a result, a commercial property may receive a lower interest rate, while a residential property may have a higher interest rate.
What documents are required for a loan against land?
You will have to submit some important documents while applying for a mortgage loan against property. Some of these documents are:
- A duly filled mortgage loan application form along with a copy of your PAN card
- Some accepted KYC documents like: Aadhaar card/ Driving license/ Voter ID card/ Lease or Rent Agreement
- Business proof: Sales tax/ Service tax/ Excise/ VAT registration/ Trade license/ Partnership deed/ Practice certificate
- Income proof: ITR statement of last three years, Balance sheet, P&L account and bank account statement of last six months
How to apply for all mortgage loans?
To apply for mortgage loan, you can apply on the website of the financial institution or by visiting their branch office in person. Follow the following steps to apply online on the website
- Go to Mortgage Loan on the property webpage
- Check your eligibility from the eligibility criteria section available on the website
- On the Mortgage Loan page, check the documents required for mortgage loan
- Click on the 'Apply Now' tab and fill in the required information, and submit the online form.
- Once satisfied with your details, the institution officials will contact you.
- You can also apply for a mortgage loan by visiting the nearest branch or outlet of the financial institution.
Advantages of Loan Against Property
Loan Against Property or LAP at a lower interest rate. Thus, you can transfer your loan from the previous lender to us on better terms. You do not have to pay the amount that you have already paid to your previous lender. You can start the process with us by paying only the remaining amount.
There are many benefits of taking a mortgage loan from Hero FinCorp. Let us understand these in detail. You also have the option of balance transfer. With balance transfer, you get a lower interest rate on loan against property, longer tenure, and you can also get a top-up or additional loan on your existing loan.
You also get the opportunity to change the loan tenure. You can also defer or extend the tenure set by your old lender.
Hopefully all your queries about mortgage loans are now resolved. So if you are also thinking of taking a mortgage loan, then apply for your loan today.
Frequently Asked Questions
What is the interest rate on a mortgage loan?
The interest rate of a mortgage loan varies due to various reasons, such as interest rate rules, purpose and loan tenure. It mainly depends on the borrower's profile and property valuation. The lender analyzes all the factors before issuing the loan.
How long does it take to get a mortgage loan?
The digital advancement in the financial sector has greatly reduced the challenges of loan approval. Unlike the old times, the process is easy, fast and hassle-free. Hero FinCorp approves mortgage loans within 7-10 days. All you need to do is fulfil the eligibility criteria and follow a few simple steps. Then, the money is disbursed in a stipulated time.
How to reduce mortgage loan interest rates?
By following a few tips, you can actually get a comparatively lower interest rate on your mortgage loan. Try choosing a shorter tenure, compare different interest rates, improve your credit score, etc.
How to calculate mortgage loan interest rate?
There is a simple formula to calculate the interest rate on a mortgage loan. Multiply your outstanding amount by your annual interest rate, and divide by 12 since you are making monthly payments. Apart from this, you can also use the following formula-
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