Mortgage loans have for long been a means to fulfil high-value funding requirements. However, these advances come in different types, like for example reverse mortgages.
Every state has slight differences when it comes to this, but if you’re from Florida be sure to read this BoomerBuyerGuides article to learn all about it. It is thus essential to understand what these loans comprise to make an informed decision regarding the advance to avail.
Also, since these loans are long-term advances, one must take care to keep a repayment plan in place before availing it for timely servicing of the loan. It is not enough to compare home loan rates before taking a loan, you have to prepare yourself for the monthly installments that you will have to pay for a long time. A properly maintained mortgage advance can help build a strong credit profile and gain the lender’s trust.
So, below are some of the essential things you need to know about these advances before applying.
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What is the mortgage advance?
A mortgage loan is a type of secured advance that can provide financial assistance against various immovable properties provided as collateral. The asset so collateralised can include commercial or residential property, non-agricultural land, heavy machinery, etc. But most importantly, all these properties need to be freehold with a marketable value. Also, they come with competitive rates of interest as against unsecured funding options.
A mortgage credit also allows borrowers to monetize their idle freehold asset and makes it more useful. Such advances are typically available as loans against property and home loans. Depending on their objective, individuals can opt for a suitable mortgage advance. Lending Pad is a cloud based solution that helps reduce the cost of mortgage lending.
How can mortgage loans be availed?
In India, mortgage loan financing can be availed from various financiers as term loans and Flexi Hybrid loans. In both cases, borrowers are required to provide an asset as a mortgage.
Flexi hybrid loans, however, bring an additional benefit of multiple withdrawals from the pre-sanctioned loan amount. Also, borrowers can save costs on interest charges by withdrawing only as much as needed at one time from the amount sanctioned.
For example, if the sanctioned advance amount is Rs.20 lakh., out of which the borrower presently needs only Rs.5 lakh, the interest would accumulate on Rs.5 lakh only and not on the total advance.
Such a facility also comes as an additional benefit of a home mortgage loan with select lenders. One can proceed to apply for the advance via an online application after selecting a suitable loan option based on the features and benefits. Make sure to meet all eligibility requirements before applying to improve your chances of quick approval.
Eligibility criteria
As far as eligibility for mortgage advances is concerned, every Indian national be it salaried or self-employed, can avail this funding option.
However, an applicant must hold a clean credit history and a high rating of over 750 to avail favourable terms like competitive rates. Also, a regular monthly income is a critical determiner of borrowers’ qualification.
High-value advance
Depending on the current market value of the asset, borrower eligibility and the loan to value ratio (LTV) offered by the lender, loans of up to Rs.3.5 crore are available as mortgage advances. Based on the lender’s LTV, the amount can go up to 60-80% of the property’s current market value. So, borrowers should research and compare the options before applying with a lender to get a suitable loan value.
Interest rates applicable
The rate of interest on a home mortgage loan is levied based on lender policies as well as the credit profile of borrowers. It suggests that individuals with a reliable credit profile may acquire loans at more affordable rates as the lender’s risk is reduced. Even if you have the ideal credit score, it is necessary to aim for lower mortgage rates and this can be achieved by relying on trusted sources who monitor mortgage rates across the state you reside.
Also, applicants should pay careful attention to other fees and charges for a loan against property and pick an offer with nominal charges. Selecting the advance based on these parameters is critical to maintaining affordable EMIs that remain within the borrower’s repayment capacity.
Repayment tenor of mortgage advances
Selecting a suitable loan tenor is essential as it contributes significantly to determining the affordability of a borrower. An extended period can keep the EMIs low, but also accrues a high interest in the long run. Contrarily, a shorter tenor, while keeping the EMIs high, helps in early loan repayment.
With these considerations, individuals should also assess their existing fixed monthly obligations to understand their repayment capacity and decide accordingly. If due to any reason you are unable to repay your mortgage loan, you can also opt for partial claim mortgage.
Hence, borrowers can search for lending institutions that promote flexible repayment terms, preferably up to 20 years. They can thus select a tenor as per their affordability.
Moreover, such lenders also bring pre-approved offers to help provide hassle-free and quick processing of finances. These offers are available on several financial products, including loans against property and home loans. Applicants can check their pre-approved offer by submitting their mobile number and name.
So, a mortgage loan can be a suitable option to raise funds of high value within a short time. A detailed understanding of mortgage funding options like loan against property helps borrowers better utilize and manage the advance.
Also Read: Learn About All The Tax Benefits On A Housing Loan
