A mortgage loan, or loan against property, acts as a lifesaver when you are battling with an emergency. It is one of the very few loans offered by Indian lenders that provide unparalleled flexibility and peace of mind.
Unlike an unsecured loan, a mortgage loan offers lower interest, longer repayment terms, flexible repayment plans and options, minimal documentation, and a host of other benefits. However, the approval of a mortgage loan depends on many factors like the legal status of the collateral, the loan to value, and the creditworthiness and financial status of the borrower.
Read this article to discover the top six steps that can ensure the mortgage loan approval.
What is a Mortgage Loan?
A mortgage loan, also known as the loan against property, is a property-based loan lending institution in India approve to eligible borrowers. To avail a mortgage loan, you must own or jointly own residential or commercial property. Some lenders also approve loan against a plot of land. A mortgage loan is one of the most uncomplicated loans you can avail. As it is secured in nature, lenders do not mind walking the extra mile to fulfil everything you need from a loan. You may use a mortgage loan EMI calculator to calculate the amount you can save by opting for a mortgage loan instead of other secured or unsecured loans.
The Top Six Steps to Ensure Mortgage Loan Approval
- Step 1 – Aim For a High Credit Score
The credit score is perhaps the most crucial factor that determines the loan interest rate, tenure, and other pertinent terms. Generally, lenders prefer a borrower whose credit score is above 750. Hence, to get the best rates, you should aspire to keep your credit score well above the 750-mark.
- Step 2 – Choose the Right Loan Tenure
Generally, lenders would encourage you to choose a longer loan tenure, as that would bring down the EMIs and make you eligible to apply for a higher loan amount. But, increasing the term also makes you susceptible to paying more money, resulting in fewer savings. Hence, it would be excellent if you choose the tenure that strikes a proper balance between your repayment capabilities and the lender’s flexibility.
- Step 3 – Select an Appropriate Loan Amount
Indian lenders generally approve up to 80% of the property’s current market value as the loan. However, the actual amount depends on the borrower’s credit score, income level, the stability of income, existing liabilities, condition of the property, and many other factors. If you opt for a higher loan, the EMIs would also be higher. Additionally, the down payment amount will be more. Hence, try to select an amount that would meet your demands, and yet you will not need to compromise with your spending habits. Use the mortgage loan EMI calculator to get an idea about the loan amount.
- Step 4 – Check Your Eligibility
Checking your eligibility is extremely important, as it is ultimately the eligibility that determines your loan terms and interest rates. Generally, you have to be a citizen of India, and your age should be between 21 and 60. Additionally, many lenders want you to earn at least INR 21,000 and above to consider you suitable for the loan. Also, the stability of your income plays a significant role. Usually, lenders reserve the best rates for people who have worked with an organisation or run a successful business for at least two years before loan application.
- Step 5 – Arrange the Documents
To avail a mortgage loan, you have to submit documents like age proof, identity proof, address proof, income statement, and property papers. Make sure the details you enter in the application form matches with the original documents. Any incorrect information will make you ineligible to avail the loan and might downgrade your credit score.
- Step 6 – Cooperate With the Loan Officer
After you apply for the mortgage loan, the lender would send an officer to your residence or office. The officer would verify the property and enquire about its legal status. It would help if you always cooperated with the officer, as it is the officer’s report which would play a significant role in the loan approval.
A mortgage loan is the best loan you can apply for when you need urgent cash. Use the mortgage loan EMI calculator to calculate the amount you need to pay before applying for the loan.