Looking for a financial backup that is easy to keep up with? A mortgage loan could be just what you need. Almost all lenders in India offer such loans against an immovable property (residential or commercial) to help you meet your various monetary requirements. However, before you decide on applying for a loan, here are a few things you need to be aware of in order to avoid confusion and be able to enjoy all the benefits that come along.
Keep These Points in Mind Before Taking a Mortgage Loan
- Your Credit Score
Understand that your CIBIL score plays a vital role in not only determining the interest rate but also your eligibility for getting a loan approval. This is the score that helps the lender evaluate your creditworthiness when it comes to repaying the loan amount. On a scale of 300 to 900, any score equivalent to or higher than 725 is considered ideal for the loan approval. The higher the score, the better are your chances of getting attractive interest rates because the lender considers you reliable and capable of paying off the money.
- Borrowed Amount
While most lenders offer huge amounts up to Rs.5 Crore on mortgage properties, be wary of how much exactly you want to borrow. Always take your monthly income, expenditures and liabilities into consideration when deciding on the loan amount because you don’t want to borrow an amount you won’t be comfortable paying back. Therefore, run your calculations to understand your affordability.
- Types of Mortgage Loan Interest Rate
When taking a property loan, you have two interest options to choose from – fixed interest and floating interest. Fixed rates, as the name suggests, remain constant over the loan tenor so your monthly dues also stay the same – this involves a lower risk. Adjustable rates, on the other hand, may initially be lower but tend to fluctuate over the tenor depending on changing market trends – this means your monthly payments also are likely to increase or decrease from time to time, which puts you in an uncertainty.
- Mortgage Options
You have a wide range of mortgage loan options in the market, each varying based on the loan amount, type of mortgage loan interest rate, repayment schedule, and additional benefits. It always pays to learn about the various pros and cons of each type before making a decision.
- Loan tenor
Mortgage loan tenors usually span up to 18 years, which makes repayments easier considering the amount of time you have to sort your finances and act accordingly.
- EMI Options
With mortgage loans, you have the option of paying back the borrowed money in smaller instalments every month – and one such way to calculate your dues is by using the loan against property EMI calculator. It is an online tool that gives you an estimate of how much you will need to pay every month to repay the loan in time. To use it, all you have to do is:
- Access the online calculator on the lender’s website.
- Enter the values of your loan principal, rate of interest, and tenor.
- Click on the ‘Check EMI’ button to get accurate results in an instant.
- Balance Transfer
During the length of your tenor, you might find a better mortgage loan with more attractive interest rates and other benefits. In such cases, you may opt for a balance transfer or ‘refinancing’. This allows you to shift your existing loan from the current lender to a new one with minimal documentation.
Not everyone is eligible for a mortgage loan. There are certain parameters that one needs to meet to get their hands on the desired loan amount. Your age, nationality, employment status, etc., determine whether you qualify or not for the loan. Check your eligibility with the lender before sending out your application for easy approvals.
Now that you know what is mortgage loan and what are its different aspects, applying for the same should not be too difficult. Nevertheless, get in touch with your lender to discuss all terms and conditions before signing on the dotted line.
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