Mortgage loan or Loan Against Property is a type of secured loan offered by banks or any other financial institutions that they provide loans against the immovable commercial or residential property or high value machines owned by the borrower. The properties have pledge as a collateral to the financial institution till the loan amount is repaid and the amount can be used by a borrower for expanding business, education of the children, medical expenses and any other purposes. The maximum loan amount can be provided by the financial institution is 70% to 80% of the property value.
Key Features of Mortgage Loan
Unlike personal loan, mortgage loan is better for the availability of higher loan amount and the flexibility of use for various purposes. Some features of loan against property are given below.
· The loan can be availed against any of the personal, self-occupied property like home, apartment and flat
· Mortgage loan could be availed using rental residential property too
· The loan offers with flexible tenure and lower interest rate compared to personal loan
· Commercial properties like malls, offices, shops and buildings can be mortgaged to avail the loan
· It is avail by mortgaging a plot or land owned by the borrower
· Interest paid for mortgage loan provides tax benefits under section 37(1) of the Income tax act 1961.
§ Immediate sanction of loan
§ Fast and east loan processing
§ Low interest rates and EMI’s
§ Simple and hassle free documentation
§ Flexible tenure
§ Speedy approvals
§ Easy balance transferring
An individual resident Indian, who wants loan against the property owned by them must fulfill the following eligibility. These eligibility criteria may vary across various banks and financial institutions.
21 to 60 years
21 to 60 years
Min.2 years of experience
Min.5 years of experience
750 or above
750 or above
Interest rates of mortgage loan varies as per the credit score, eligibility and the type of customer. The rate of interest also varies from bank to bank and all financial institutions. Some of the interest rates of some leading home lending financial institutions are given below.
Up to 1.5% of loan amount or Rs.45000 whichever is higher
1% of loan amount or Max Rs.50,000
PNB Housing Finance
Up to 2% of the loan amount
Up to 1% of loan amount
Up to 1.5% of loan amount
The following documents are mandatory for availing the home loan. The required documents are also varied across the financial institutions.
· Identity Proof (Copy of Pan Card/Voter ID/Driving License/Passport)
· Address Proof (Copy of Aadhar card/Driving License/Electricity Bill/Telephone Bill/Gas Bill)
· Income Proof (Pay Slip for salaried employees for 6 months/ ITR for last 3 years, Balance Sheet & profit and loss account for last 3 years)
· Bank account statement for all bank accounts held by applicant
· Complete document of the property
Factors Affecting Mortgage Loan Interest Rate
1) Loan Tenure
The loan repayment period affects the interest rates as for shorter tenure, lender may go for higher interest rates and higher EMI’s.
2) Credit Score
Credit score always affecting the interest rates as higher the score lowers the interest rate and lower the score higher the interest rate.
3) Borrower’s Profile
Interest rates may vary depends on the age, nature of work, income and some other factors.
4) Type of Property
The loan interest rate can affect depends on age, market value, condition of property to be mortgaged and its geographical area.