Mortgage Loans are secured loans that involve using your property as collateral. The lender assesses the loan amount based on the property’s market worth, enabling you to borrow up to 75% of its value from institutions like Hero FinCorp. The lending entity retains ownership of the property deed until full repayment of the loan, with the option to sell the property if payments are not met. This post will explore the benefits of Mortgage Loans and walk you through the application process.
What are Mortgage Loans?
Mortgage Loans cater to self-employed individuals who can offer properties as security when seeking loans. When you apply for a loan backed by property, lenders review your asset’s value to determine your borrowing capacity.
Purposes of Borrowing a Loan Against Property
There are reasons why one might consider borrowing a loan against their property, such as:
- Consolidating debts
- Expanding a business
- Purchasing a property
- Availing lease rent discounts
- Investing in machinery or equipment
- Building up working capital
- Replenishing inventory
Benefits of Obtaining a Loan Against Property
Some advantages of opting for a loan against property are as follows:
- Diverse Property Options: You have the flexibility to use types of properties as collateral for your Mortgage Loan, including properties, while still retaining ownership and possession.
- Competitive Interest Rates: Secured loans typically have lower interest rates than unsecured loans, potentially reducing monthly payments and overall debt burden.
- Higher Loan Amounts: The maximum loan amount you can secure is tied to the market value of your property, allowing you to borrow up to 75% of its value. This makes it possible to access funds more easily than with a business loan.
- Extended Repayment Period: Mortgage Loans offer repayment terms that can span up to 15 years, resulting in easier-to-handle instalments.
- Tax Benefits: Under Section 31 of the Income Tax Act, you may also be eligible for tax deductions on the interest paid on the loan against property. Furthermore, under Section 24, you can claim a tax deduction of up to Rs. 2 Lakh if the loan is used for constructing a house.
How to Apply for a Loan Against Property?
Here’s a step-by-step guide on how to apply for a loan secured against your property:
- Fill out the Application Form: Start by completing all sections of the application form with your information, work details, and particulars of the property used as security.
- Verify the Information: Ensure all provided information is accurate before proceeding. If there are any discrepancies, a representative may contact you for clarification.
- Submit Necessary Documents: The subsequent step involves submitting documents for verification purposes, such as proof of identity, income statements, address validation, and property-related papers. Additional documentation may be required based on the lender’s criteria.
- Await Verification: Once all documents are submitted, the lending entity will authenticate them before approving the loan application.
- Agree to Loan Terms: Review the loan offer received via email carefully and verify all terms and conditions. Subsequently, agree to accept the offer to initiate the process of receiving funds.
- Receive Disbursement: Following acceptance of the loan offer, funds are usually disbursed within hours into your bank account according to the approved loan amount.
Things to Consider when Applying for a Mortgage Loan
Here are some things to keep in mind when you’re applying for a Mortgage Loan:
- Compare loan options from providers to find the best deal with fair rates and terms.
- Be cautious when selecting the loan tenure. Although monthly payments may seem appealing, opting for a tenure also means higher overall interest costs. Choosing a tenure can help you pay off the debt faster and save money on interest, although it may lead to EMIs and pose challenges in repayment. Consider using a mortgage loan EMI calculator to determine the tenure with manageable EMIs.
- Avoid valuing your collateral property, as this can create distrust and possibly result in your application being denied.
Understanding the meaning of a Mortgage Loan in Hindi is essential for understanding how Mortgage Loans work, which is also essential for planning your application process. Mortgage Loans offer a way to access funds for expenses by leveraging the value of your property without selling it. At Hero FinCorp, applying for a Mortgage Loan is straightforward. They provide funding along with flexible repayment options.
