What Factors Should We Consider While Choosing a Mortgage Loan?

Financial lenders extend a mortgage loan or LAP to help borrowers meet different financial requirements such as high-end purchases, countering medical emergencies or even debt consolidation.

A mortgage or loan against property extends a high-loan value principal amount against minimal interest rates. It is one of India’s most sought-after secured credit options and is more affordable than unsecured alternatives. 

Availing this advance is easily affordable and makes repayments easy through the flexible tenor and other attractive terms.

Nonetheless, before availing this secured credit, borrowers should learn about factors pertaining to its features, terms and conditions, other charges associated with it. Knowing all these aspects will allow borrowers to optimize their benefits.

Things to consider while availing of mortgage loan

Based on a property’s value and financial lender’s policy, borrowers can avail up to 40-70% as a loan. Here are some of the factors to keep in mind if you plan to avail a mortgage loan.

  • Loan quantum

For a mortgage loan, the loan amount one can avail primarily depends on the property’s market value. Generally, borrowers can avail up to 40-80% of the property’s worth from the market as a loan, depending on the financial lenders. If a borrower is looking to avail a higher loan amount, then he/she is recommended to search and find a suitable lender in the market who will meet the desired terms.

  • Charged interest rate

The interest rate that will be charged on the loan amount depends on few factors like tenor, loan amount, credit history, income etc., and can also differ across lending. When a borrower decides to avail a loan against property, he/she should ensure getting the most affordable options. Individuals should research well to find a suitable financial lender, extending the most competitive property loan interest rate.

  •  Repayment tenor

For a mortgage loan, most financial institutions or lenders will offer a flexible repayment tenor of up to 15 years. Choosing a longer tenor reduces the cost of monthly EMIs, thus increasing the affordability of a loan. However, one should keep in mind that a longer tenor significantly increases the cost of borrowing. This happens because the interest amount on loan is calculated in a compounding form, and if one chooses a longer tenor, he/she will be paying a higher number of EMIs in the long run.

  •  Additional or processing charges

One of the important factors that individuals neglect checking while availing the loan is the additional processing charges associated with it. Some financial lenders impose statutory charges, prepayment charges, service charges and more. 

Hence, it is essential to calculate all the additional charges when estimating the loan’s real value. Such added levies can appear as a small amount but can impact the total borrowing cost of a loan significantly, thus affecting the repayment ability of a borrower.

  •  Tax exemption 

Another important factor to keep in mind is that, unlike a home or education loan, one cannot avail a tax benefit on a mortgage loan. Borrowers are supposed to pay tax on the amount they are using to repay the loan. Tax benefits on mortgage loans are available only if the amount availed is channeled towards home construction or education.

Apart from the above factors, applicants must also look for pre-approved offers that simplify and expedite the borrowing experience. Borrowers can avail such lucrative offers on several financial products such as loan against property, home loan, etc. You can check your pre-approved offer online by entering your name and contact information.

Individuals must also maintain a record of good credit scores and keep all the necessary documents ready to secure a high loan value against the property. Finally, they should be well aware of all the terms and conditions of the financial lenders before applying for a mortgage loan to optimize benefits.

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