A Guide on Mortgage Loans

July 19, 2017by Deep0
1.-A-Guide-on-Mortgage-Loans.png

Today, buying a house is everyone’s dream, but not all are either capable enough to pay a big amount or are eligible for a home loan. During such times, a mortgage loan can become your savior. So let us know more about this savior in times of crisis:

What is a Mortgage Loan?

A mortgage loan is a loan in which a property (immovable or moveable) is used as collateral. It is a type of a secured loan under which an agreement is made with the lender (Bank or Financial Institution) in which the borrower receives upfront cash by giving his property as a security to the bank and makes payments in installments to the banker. Until the full payment of loan (along with the interest) is paid, the property remains mortgaged with the bank.

Advantages and Disadvantages of a Mortgage Loan

Advantages

  • Mortgage repayments are similar to rental payments on the same property.
  • With fixed rate mortgage, monthly payments become predictable.
  • Protection from any sudden large increase in rent as your mortgage repayment would be fixed.
  • Loan repayments are tax deductible.
  • Any rise in value of the property will increase your capital.

Disadvantages

  • Risk of losing the collateral if default occurs.
  • Complex Procedure to avail the loan.
  • Variable mortgage rates depend on the market fluctuations.
  • Extra charges like processing fees, legal charges, insurance fees, etc are there.
  • Any loss in property value would negatively impact the capital.

Eligibility Criteria

1) For Salaried Individuals

  • Min. age should be 25 years at the time of applying for the loan.
  • The age of individual must be less than 60 years at the time of applying for the loan.
  • Min. Loan Amt. – Rs. 5 lakhs.
  • Working in a reputed company.

2) For Self-employed Businessmen

  • Income Tax Returns must be filed by an individual.
  • Min. age should be 24 years at the time of applying for the loan.
  • The age of an individual must be less than 65 years at the time of applying for the loan
  • Min. Loan Amt. – Rs. 5 lakhs.
  • Continued business should be existing for the past 3 years.

3) For Self-employed Professionals

  • Individual must be a professional (i.e. doctor, engineer, dentist, architect, chartered accountant, cost
  • accountant, company secretary, and management consultants) only.
  • Min. age should be 24 years at the time of applying for the loan.
  • The age of individual must be less than 65 years at the time of applying for the loan
  • Min. Loan Amt. – Rs. 5 lakhs

Documentation Required

1) For Salaried Individuals

  • KYC Documents (PAN Card, Aadhaar Card, Voter ID card, Driving License, etc.)
  • Address Proof (Electricity Bill, Tax Bill, Telephone Bill, etc.)
  • Last 6 months’ bank statement/passbook of the account in which your salary is being credited.
  • Salary Slip of last 3 months showing all the deductions.
  • Form 16/ITR (Income Tax Returns) of last two years.
  • Existing Loan Details – Welcome Letter and Loan statement (if any).
  • Copies of all the property documents of the property that you wish to apply for the loan.
  • Application Form of the respective bank along with photographs.

2) For Self-employed Businessmen/Professionals

  • KYC Documents (PAN Card, Aadhaar Card, Voter ID card, Driving License, etc.)
  • Address Proof (Electricity Bill, Tax Bill, Telephone Bill, etc.)
  • Certified Financial Statements for the last 3 years. (ITR, P&L, Balance Sheet, etc. – if applicable.)
  • Last 6 – 12 months’ bank statement/passbook of the account(s) in which income is being credited.
  • Existing Loan Details – Welcome Letter and Loan statement (if any).
  • Copies of all the property documents of the property that you wish to pledge for the loan.
  • Office Proof (VAT Return, CST Return, Rent Agreement, Electricity Bill, etc.)
  • Business Continuity Proof (Registration Certificate, Old ITR, Old Bank statements, etc.)
  • Application Form of the respective bank along with photographs.

Fintech Companies – The upcoming frontier

With the introduction of Fintech companies (like CapitaWorld), the processing of such loans have become easier. The customers are beginning to have a good experience of Fintech companies as they have relieved the customer from the hassles of paperwork and their frequent visits to various banks. This frontier, as it develops, will further reduce the burden on the customers, become faster, easier, and more transparent.


Leave a Reply

Your email address will not be published. Required fields are marked *