Mortgage loans, property loans, or simply loans against property are financial products that allow property owners to secure funds by pledging a residential or commercial property they own as security. Since the loan is backed by collateral, the risk for lenders is minimal, leading to lenders charging nominal loans against property interest rates on these loans.
Additionally, borrowers are given the flexibility to choose their loan tenor based on their income and repayment capacity, further making loan repayment easier. More importantly, certain end uses also provide borrowers with mortgage loan tax benefits. In this article, we take our readers through the process of how to apply for mortgage loan.
Step-by-Step Guide on How to Apply for Mortgage Loans in India
Research Lenders
From banks and NBFCs to private lenders, different financial institutions operate in the mortgage loan space. Different lenders offer different benefits and loan terms. Researching lenders will allow you to understand what each lender is offering. Additionally, it will also allow you to negotiate better loan terms and conditions and choose the best loan offer for you. Loan applicants must use the loan against property calculator to compare loan offers from different lenders and choose the most lucrative one for them.
Make a Loan Application and Submit the Documents Required for a Loan Against Property
Once you know the lender you want to avail of a loan against property from, the next step in the loan application process is making a loan against property application to this lender. Borrowers can apply both online and offline. Upon receiving your loan application, your lender will verify the information provided and respond to your request for the loan.
If they want to sanction you a property loan, they will ask for additional documents, including identity, income, and address proof documents. You will also need to submit all property documents. You can ask your lender to provide you with a comprehensive list of all the documents you will need to submit during the application process. This will make your life much easier and help you be better prepared for the entire application process.
Wait for Document Verification
After you have submitted your loan application and the required documents, your lender will verify all the documents. This will easily take a few days/weeks. This step of the loan against property application process is the longest and also the most important. If you pass this stage, during the next step, your lender will negotiate the loan terms and conditions and work on creating the final loan against property offer.
Sign the Final Loan Agreement
To sign the final loan agreement, you will have to visit your lender's office. Before signing the final offer letter, go through the terms and conditions of the loan carefully. Go through every term and condition mentioned. Sign only if you are satisfied. If you are not happy with the loan terms and conditions, renegotiate with your lender.
After you have signed the final loan against the property offer letter, your lender will disburse the loan money into your account. You will now start paying your loan EMIs.
If you are planning to apply for a mortgage loan, here are a few things to keep in mind.
People trying to apply for a mortgage loan must understand the different types of mortgage loans available in India. Loan applicants have the option to choose from fixed and floating interest rates. Floating interest rate mortgage loans tend to be cheaper than fixed mortgage loan interest rates.
Before applying for a mortgage loan, you must assess your eligibility and repayment capacity. The mortgage loan eligibility calculator will help you understand the loan amount you qualify for based on your income and debt-to-income ratio. The mortgage loan EMI calculator, on the other hand, will help you reach the most ideal combination of loan value and tenor and EMIs that you can comfortably repay each month without defaulting.
Your credit rating is important. A high credit score indicates excellent repayment capacity and enables borrowers to negotiate profitable loan terms and conditions. Before initiating the mortgage loan application process, check your credit score and make sure it is 750 or above.
Many lenders include hidden costs and charges. Do not sign the final loan agreement without reading all the terms and conditions and discussing all the charges and fees with your lender.