Important Things to Consider Before Getting Mortgage Loan
Mortgage loans are the loans which are raised for the purpose of the buying real estate by putting any property as collateral. The mortgage loans are termed as secured loans and are legally offered a right to the lender to take a possession and sell the secured property in order to pay off the loan amount if the borrower fails to pay off his loan amount and defaults on the loan. Thus, we can say that the mortgage loan comes under the obligation, and the obligation is either pay the loan in full or the collateral or the property being mortgaged will be sold off in order to recover the loan amount.
The sole purpose of mortgage loans is to raise enough funds for different purposes ranging from buying a property to some other activities. The Mortgage loans, which are obtained through the use of the property as collateral is one of the most sought after loans in the country and serves as one of the easiest way to fulfill the financial needs of the people with ease. The financial needs can be Business expansion, marriage, education, medical treatment and any other personal needs can be met through the mortgage loans. In normal case, people take mortgage loans for the purpose of buying a home or a plot, etc and thus are an effective way to make up the shortage in the financial conditions. The Mortgage loans are termed as the secured loans as the property is being pledged as collateral.
Rate of Interest
The mortgage loans follow a different rate of interest and most common among them are the fixed rate and flexible rate of interest. While, in the fixed rate of interest, the borrower needs to pay same or exact / certain amount for the whole tenure of the loans, the flexible or variable or floating rate of interest allows the borrowers to pay the amount based on fluctuations. However, one must keep a fact in mind that, even in floating rate, the interest rate is fixed for a certain period, after which it keeps on changing with the economic fluctuations.
The mortgage loans are offered by almost every bank in the country. While the process of mortgage loans is almost similar in all banks of the country. The rate of interest also show the similar pattern throughout. At the same time, the rate of interest can show a variation with changing times.
The current rate of interest for different banks are as mentioned below :
PNB Housing: PNB Housing offers a rate of interest which is floating and is benchmarked at 14.35%, however the rate of interest varies with the commercial property and residential. In case the property is commercial, the floating rate of interest is 11.5% to 12.00%. While, in the case of residential property, its slightly less and is a floating one within the range of 11.25% to 11.75%. The same differs in the case of fixed rate of interest.
State Bank of India: The rate of interest in the case of State Bank of India is 10.75% to 11.70%. However, when the rates of interest gong deeply vary nominally based on the loan tenure and loan amount.
Currently the rate of interest varies from 12% to 16%, depending on the banks across the country.
The tenure of mortgage loans varies and when we talk about the state bank of India mortgage loans, the tenure of the loan is from 1 year to 15 years. While in other banks, the same tenure can be seen varying with quite ease and one can see the loan tenure going upto 20 years in some cases.
The documentation required in case of mortgage loans can vary from bank to bank, but still the KYC documentation is almost similar in all the cases.
- The documents are
- The application form along with photographs
- Identity proof
- Residence proof
- Salary slip statements for 3 months
- Form 16
- Last 6 months bank statements
- Processing fee cheque
While the same varies in case of self employed professionals and replacement of salary slip statements for 3 months is done by the education qualification certificates and proof of business existence, form 16 is replaced with the last 3 years income tax returns, 6 months bank statements is replaced with the profit & loss balance sheet, and property related documents are replaced with the all title related documents along with the approved sanctioned or building plan.
There are several other requirements and restrictions in regard to mortgage loans and one has to check personally with the choice of the bank.
Eligibility for Mortgage Loans
The eligibility is decided upon fulfilling the above documentation and some other factors in the form of age, work experience, etc can play a part in either the approval of rejection of the mortgage loan application. One needs to be at least 21 years of age and factors like valuation of the property along with the total annual income and work experience plays a role in the fulfilling of the eligibility criteria for mortgage loans.
Mortgage loans are long term secured loans, which are designed specially to meet the financial needs and requirements of the people in the case, they do have immovable property to be put as collateral. The mortgage loans allow people to have an ample time frame to pay off their debt and better shape their future. It is a cost effective way of borrowing money and can be paid using smaller EMIs. One important aspect of mortgage loan is that you can even get loans against under construction property of yours.