Mortgage Loan Eligibility and Documents Required

Mortgage Loan Interest Rates 2021 (Updated)

Mortgage Loan Interest Rates and Charges

Mortgage loans are secured loans that an eligible applicant can avail by keeping an owned property as collateral to the financial institution. Lenders generally offer attractive mortgage loan interest rates which makes loan repayments affordable and convenient.

Mortgage loan interest rates for self-employed individuals ranges between 10.50% and 14.50%. As for salaried borrowers, the general property loan interest rate remains between 10.10% and 11.50%.

A borrower can avail up to Rs.3.5 crore as a mortgage loan with the repayment tenor extending up to 20 years.

Maximum loan amount a borrower is eligible to avail depends on the Loan to Value (LTV) ratio offered by the lender among other factors. With the best lenders, the LTV can range between 70 and 80% of the property’s market value.

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Here is a list of the rates and charges of Mortgage Loan .

Mortgage Loan Interest Rates in India
Types of Fees on Property Loan Charges Applicable
Loan Against Property Processing fees Up to 1.5%
Property Loan statement charges Rs. 50
LAP Interest and principal statement charges NIL
Mortgage EMI bounce charges Up to Rs.3,000/-
Penal interest Up to 2% per month + applicable taxes
Mortgage origination fee Up to Rs.4,999 (One time)

Mortgage Loan Foreclosure Charges

 
Mortgage Loan Foreclosure Charges in India
Borrower type: Interest type Time (Months) Foreclosure charges
Individual: Floating rate >1 Nil
Non-individual: Floating rate >1 4% + applicable taxes
All borrowers: Fixed rate >1 4% + applicable taxes

Mortgage Loan Pre-Payment Charges

 
Mortgage Loan Pre-Payment Charges in India
Borrower type: Interest type Time (Months) Part-prepayment charges
Individual: Floating rate >1 Nil
Non-individual: Floating rate >1 2% + applicable taxes
All borrowers: Fixed rate >1 2% + applicable taxes

Bajaj Finserv also brings you the fastest Loans against Property with disbursal of loan amount within 4 days.

Mortgage Loan Process

Both self-employed and salaried individuals can avail a mortgage loan against an asset provided as collateral. Applicants need to meet minimum eligibility requirements and collateralise an asset to avail funding at favourable terms. The following steps elaborate on the complete mortgage loan process.

  1. Select a suitable mortgage loan that comes with attractive features to suit your financing requirements and apply with your selected lender. Opt to apply online for hassle-free processing.
  2. Bajaj Housing Finance Limited, one of the most prominent NBFCs, provides such advances at competitive mortgage loan interest rate to candidates applying with suitable eligibility. The loan value approved for disbursal depends on two essential factors –
    • Borrower’s eligibility
    • The LTV or loan to value ratio determined by the lender

    LTV is the maximum proportionate value a lender is ready to extend as a loan against the property’s market value and can range anywhere from 70 to 80% of the current market value of the property to be mortgaged.
  3. Next, complete the paperwork by handing over the required personal, occupational and property details.
  4. The lender then initiates the verification process and verifies eligibility with suitable property value assessment. A property site visit is an essential part of such verification.
  5. Once eligibility is confirmed, the lender approves the loan amount and issue a sanction letter.
  6. With your agreement to the terms of lending, the lender initiates loan disbursal.

During disbursal, borrowers also need to submit the original documents of property ownership and sign the mortgage registry document. Processing of the latter can take up to 5 days. Bajaj Housing Finance Limited provides online application facility for all mortgage advances like Loan Against Property and ensures quick assistance for loan processing via an assigned representative.

Factors Affecting Mortgage Loan Interest Rate

Mortgage loan interest rate are typically low owing to their secured nature. As a result, borrowers enjoy comfortable repayment and low cost of borrowing. Several factors influence mortgage loan interest rates, read on to know more about these.

1. Property type and location

Although any immovable asset is eligible for a loan against property, its type determines the mortgage loan rates. For instance, lenders offer different interest rates for residential and commercial properties. Besides, the resale value of a property, its location, also influences this interest rate.

Usually, a property located in the heart of a city with modern amenities has higher resale value. Hence, on mortgaging that property, lenders can ascertain the recovery of the loan amount in case you default. Consequently, interest rates will be lower. Similarly, the property’s age also affects mortgage loan interest rates. The newer the property, lower the interest rates.

2. Credit score

Lenders also consider a borrower’s credit profile before deciding mortgage interest rate. Below are some of the aspects that influence this rate.

  • Credit score
  • Income
  • Employment type
  • Age
  • Credit utilisation ratio
  • FOIR
  • Existing debts

Preferably, a credit score of 750 and above is deemed ideal to secure competitive interest rates from lenders. Similarly, the interest rate for a 55-year old salaried applicant would be more as he/she would retire from the job soon.

Moreover, lenders also check how the applicant handled previous debts, repaid on time or not, etc. Since all these factors directly influence credit score, it is important to adopt healthy financial habits to upkeep the score. It helps in availing the best mortgage loan interest rates available in market.

3. Size of loan

A mortgage loan is a high-value credit, and it is possible to avail up to 80% LTV against a property. However, high-value loans as risky on a lender’s part, as monthly instalments are higher in that case. Therefore, to compensate for the risk of borrowing, they may charge a high mortgage loan interest rate when loan amount is substantial. Hence, it is necessary to assess the exact credit requirement before applying to ensure competitive interest rates.

Note: Avoid pledging high-value assets to avail a small mortgage loan.

4. Loan tenor

The tenor of loan also plays a crucial role in deciding mortgage loan interest rates. Usually, a mortgage loan accompanies a long tenor, and you can choose a term as per your repayment capacity. Nonetheless, on selecting a shorter tenor for high loan value, lenders may consider you a risky borrower. In such cases, the interest rate is usually higher.

Nonetheless, opting for a longer tenor can increase the total interest outgo in the long run. In this case, use an online loan against property EMI calculator to check the EMI outgo after entering tenor and interest rate proposed to you.

Besides these reasons, mortgage loan interest rates can also be influenced by market conditions if the rate type opted for is floating in nature.

Types of Mortgage Loan

There are different types of mortgage loans depending upon the nature of mortgage. Know them before you apply for one.

  1. Simple mortgage: It involves personal mortgaging of an immovable property, which bestows upon the lender a right to sell such property for loan recovery in case a borrower fails to repay the amount.
  2. English mortgage: It involves the creation of personal liability for the borrower, whereby mortgage involves property transfer to the lender and recovery, thereby after successful repayment.
  3. Usufructuary mortgage: The arrangement involves the transfer of property possession, allowing a lender to receive rent or any other payment for such property until loan repayment in full.
  4. Mortgage via a deposit of title deed: It comprises the process of a borrower depositing the mortgaged property’s title deed with the lender until repayment is complete.
  5. Conditional sale mortgage: It refers to an arrangement wherein the property is sold to the lender with such sale becoming effective only in the case of repayment defaults. However, successful repayment nullifies the sale arrangement.

If identifying a particular mortgage type within these classifications is not possible, it is termed as an anomalous mortgage.

Lenders provide mortgage loans customised to suit diverse funding needs of borrowers. Features, benefits, and mortgage loan interest rates on such advances vary with the credit option and lender selected. They include –

  1. Loan against property – The high-value loan comes with no restriction to end-use, allowing borrowers to utilise it for diverse, big-ticket funding needs. Loan utilisation in this case includes fulfilling funding needs for the likes of business expansion, asset acquisition, medical emergencies, wedding expenses, etc.
  2. Mortgage loans with Flexi Hybrid feature – Bajaj Housing Finance Limited provides its Mortgage Loan with the Flexi Hybrid feature, which allows borrowers to make multiple withdrawals from a pre-sanctioned loan amount. Also, interest accrual only on the withdrawn amount makes EMIs affordable.
  3. Top-ups on mortgage loans – Borrowers can also avail top-up advance when availing a balance transfer facility for an existing mortgage loan. It comes with a high loan quantum and at low mortgage loan interest rates.

Eligibility Criteria for a Mortgage loan

Applicants must fulfil the following eligibility criteria to apply for a mortgage loan.

  1. Occupation - Borrowers should either be salaried or self-employed to avail a mortgage loan. The former also needs to hold employment with a public/private sector company or an MNC while the latter must have a regular income source.
  2. Age – Salaried employees must qualify the age range of 33 and 58 years, while it is between 25 and 70 years for self-employed applicants.
  3. Credit score – Lenders prefer a high credit score of more than 750 to deem applicants creditworthy.
  4. Maximum loan value – Bajaj Housing Finance Limited offers a maximum mortgage loan value of up to Rs.1 crore to salaried applicants and up to Rs.3.5 crore to the self-employed.
  5. Residential status – Applicants must also be Indian citizens residing in the country. Further, to avail a mortgage loan from Bajaj Housing Finance Limited, self-employed applicants must also reside in one of the following cities –
    • Mumbai, Delhi, Kolkata, Hyderabad, Bangalore, Ahmedabad, Pune, Thane, Chennai, Udaipur, Vizag, Surat, Cochin, Aurangabad, Indore.

The maximum loan tenure for salaried applicants can go up to 20 years while self-employed individuals can choose repayment tenure of up to 18 years.

A borrower’s eligibility for a mortgage loan also depends on the property type, wherein LTV can vary as per the property mortgaged. Lenders usually offer the following LTV as per the below-listed property type –

  1. For residential property – Up to 80%
  2. Commercial property – Between 60 and 70%

Documents Required for Mortgage Loan

Provide the following documents along with a duly filled application form when applying for a mortgage loan for hassle-free processing.

  1. KYC documents – All documents serving as proof of identity and address, including PAN Card, Aadhaar Card, Voter Id Card, Passport, Driving License, utility bills, documents of a registry, rent or lease agreement, or any other document issued by the government or an authorised body.
  2. Proof of income – The documents serving as income proofs differ with applicant type. Salaried applicants must provide their latest salary slips and statements of bank accounts for three previous months, along with Income Tax Returns filed.
    Self-employed individuals must provide their bank account statements for 6 previous months as proof of regular income.
  3. Property documents – Applicants must also keep documents of property ownership handy when applying for a mortgage loan.

Borrowers must provide all documented proofs of their income from available sources to improve their chances to avail the loan at competitive mortgage loan interest rate.

Mortgage Loan EMI Calculator

Mortgage loan borrowers need to make a monthly repayment of the loan amount via EMIs. A mortgage loan EMI calculator is thus an online tool that allows individuals to assess their loan repayment capacity via quick Equated Monthly Instalments computation.

Provide only a few essential details to assess the EMI amount, like –

  • The amount of loan you plan to avail.
  • The mortgage loan interest rate charged by the lender.
  • A suitable tenure for loan repayment.

Based on these entries, the EMI calculator computes the fixed monthly liability that borrowers need to bear for the set loan amount and tenure. The calculator works on a simple formula for EMI computation –

E = P * r * (1+r)^n/((1+r)^n – 1)),

Wherein,

E equals the instalment amount, P stands for the loan principal, r represents the mortgage loan interest rate, and n represents the tenure value in months.

The EMI calculator is a handy tool that helps individuals determine a suitable loan amount and tenure that keeps monthly repayments affordable. Assess your EMI suitability in the following two steps, wherein the mortgage loan interest rate remains constant.

  1. Adjust the loan amount, wherein such a change affects the EMI value proportionately.
  2. Change the tenure value, wherein such change results in an inversely proportional instalment value.

Once entered, adjust the loan amount and tenure value to arrive at a suitable EMI amount that fits your repayment capacity.

The mortgage loan EMI calculator also helps individuals compare various loan options from different financial institutions.

Reverse Mortgage

A reverse mortgage is a typical financing arrangement designed to fulfil the funding needs of individuals above 60 years of age. It provides financial security to senior citizens owning any residential property. The following few pointers outline the features of the financing facility –

  1. It helps improve the immediate financial status for senior citizens.
  2. Borrowers can utilise the loan amount to fund diverse monetary needs.
  3. It comes with varying payout options, both periodic and in a lump sum.
  4. It comes with zero risk of default as loan recovery is effected via property auction. The borrower or an heir can, nevertheless, opt to repay the loan amount to reclaim the property rights.
  5. The total repayable amount can, at no cost, exceed the total market value of the property put for reverse mortgage financing.

The requirements one must meet when availing a reverse mortgage facility include –

  • The property extended for reverse mortgage benefits must be the borrower’s permanent residence.
  • He/she must be residing in the said property for not less than 20 years.
  • If applying with a spouse, either of the two must be at least 60 years old, with the spouse’s age at a minimum of 55 years.

While a reverse mortgage arrangement is a suitable funding option, individuals can also look for alternative financing facilities like mortgage loans. Bajaj Housing Finance Limited provides such advances at nominal Mortgage Loan interest rates and other attractive features.

Difference between Reverse Mortgage and Mortgage Loan

The following outline the significant differences between a mortgage loan and a reverse mortgage facility.

  1. Property involved – A mortgage loan can be availed by collateralising either a residential or commercial property. For the former, the borrower need not necessarily use it as a place of permanent residence.
    Under a reverse mortgage, the property provided must be a residential property used by the borrower as a place of permanent residence.
  2. Eligibility – Any salaried or self-employed individual qualifying the set age range can avail a mortgage loan by fulfilling necessary income and property criteria. In case of a reverse mortgage, a borrower must be above 60 years of age.
  3. Repayment liability – A mortgage loan requires borrowers to make a monthly repayment of such advance via EMIs. Under reverse mortgage financing, repayment of the advance is not immediate, and recovery is undertaken only under specific circumstances.
  4. Interest rate – Although a borrower is not liable to make immediate repayments after availing advance under a reverse mortgage, interest rates on such advance are usually high. Contrarily, the mortgage loan interest rate are affordable and allow convenient repayment.

Steps to Apply for Mortgage Loan

Complete the application process for a mortgage loan in the following few steps.

Step 1 – Assess your loan requirements and select a suitable lender based on factors like mortgage loan interest rate, repayment flexibility, etc.

Step 2 – Fulfil the eligibility requirements and check affordability with a mortgage loan EMI calculator.

Step 3 – Select the ‘Apply Now’ option and fill up the application form available online with essential personal, employment, income and property details.

Step 4 – Next, a lender representative will get in touch with you to complete identity, address and property verification.

Step 5 – Once everything is in place, the loan amount is approved shortly. With Bajaj Housing Finance Limited, the time taken for loan approval is reduced to 48 hours*.

Step 6 – Complete the application process by handing over the required documents to a lender representative visiting you. Paperwork at this stage involves original property documents submission for mortgage approval and registry.

Borrowers can expect to receive a loan approval as per the lender’s policies. Bajaj Housing Finance Limited provides one of the fastest Mortgage Loan disbursals under 4 days.

Proceed to measure your loan eligibility as per the applicable mortgage loan interest rate and apply accordingly.

Mortgage Loan Interest Rates and Charges FAQs

How to lower mortgage loan interest rates?

Follow these simple steps in order to reduce your mortgage loan rates:

  1. Pay down the principal amount
    When you take a loan against property, try to make extra payments each month which will help you to lower mortgage loan interest rates.
  2. Good Credit Score
    If your credit score is good enough then mortgage loan is the best option for you. A good credit score proves that you’re likely to repay the loan, which means lower mortgage loan rates for you.
  3. Shorten your loan
    Try to make your mortgage loan tenure 10 or 15 years. The loan with shorter-term will have low mortgage loan rates.
  4. Refinance
    Those who are looking for a lower mortgage loan rate of interest should consider refinancing their existing mortgages. Use a mortgage loan EMI calculator to decide whether refinancing is really worthwhile.

How to calculate mortgage loan interest rate?

In order to calculate mortgage loan interest rate, use the following formula:

EMI= [P x R x (1+R)/\N]/ [(1+R)/\N-1]

In this formula,
P- Principal
N- No. of monthly installments
R- Rate of interest
You can also calculate mortgage loan interest rate by mortgage loan calculator

What is the difference between a Personal Loan and a Mortgage Loan?

Personal Loan and Mortgage Loan are two different types of advances Bajaj Finserv provides with different purposes, features and more. Difference between Personal Loan vs Mortgage Loan include –

  • Personal Loans are unsecured credit offered to individuals with high creditworthiness. Mortgage Loans are secured advances provided against property mortgage.
  • You can avail mortgage credit of high value at a lower rate of interest as against a personal credit with lower value and high interest rate.
  • Mortgage Loans come with longer repayment tenures than personal advances.

Between a Personal Loan and Loan Against Property, the latter becomes a more convenient and affordable financing option if you have a property to be mortgaged. Apply for it with essential documents to enjoy quick approval.

When will my mortgage loan interest rate change?

The changes in mortgage loan interest rates will depend on internal benchmark of financial institutions.

How is Bajaj Finserv Mortgage Loan the best?

Bajaj Finserv Loan Against Property is one of the best mortgage loans to avail as it comes with unique borrower-friendly features such as –

  • High-value loan of up to Rs.3.5 Crore to meet big-ticket expenses.
  • The flexible tenure of up to 20 years for convenience in repayment.
  • Fastest Property Loan with approval within 48 hours and disbursal within 4 days of approval.
  • High-value Top up Loans with balance transfer facility at lower rates of interest.
  • Flexi loan facility for anytime-withdrawal from pre-sanctioned credit amount and interest repayment only on the amount withdrawn.

To avail these attractive features of Bajaj Finserv Mortgage Loan, apply with the online form.

What is the difference between Home Loan and Mortgage Loan?

When it comes to Home Loan vs Mortgage Loan, the most vital differences to consider include –

  • While the former is a type of mortgage credit itself, the latter is an advance lenders provide against collateral. Both Home Loan and Loan Against Property are loans availed against the property mortgaged.
  • A mortgage credit does not have a fixed purpose of use; a home advance is provided to acquire a residential house.
  • For the former, lenders pay directly to the seller, while the amount of a mortgage credit like advance against property may be transferred directly to your account.

With this difference sorted, you can apply for a Loan Against Property with Bajaj Finserv as it comes with no end-use restriction.

Can an existing borrower avail the new mortgage loan interest rate?

Yes, this is possible if you have opt for floating interest rate. This depends on internal benchmark of financial institutions also. So changes in mortage loan interest rate will directly impact your interest rates too.

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