Easy access to substantial funds and affordable interest rates are some key reasons why India’s mortgage loan market is about to reach USD857.87 billion by FY 2026. On top of that, its no end-use restrictions feature enables individuals to make use of the borrowed amount to meet any urgent financial requirements.
Even though getting approval for such loans is comparatively easier than other secured credit advances, potential borrowers should know some of its intricacies before moving forward.
Documents required for a mortgage loan
Because of the secured nature of property loans, the documentation process remains pretty lenient. Individuals meeting the basic eligibility criteria need to furnish some of the basic documents to get approval for this credit facility. Before approaching a lender, along with researching mortgage loan interest rate, terms, etc., one should know about the document requirements too. Here is a list:
- Proof of identity, which includes PAN card, Voter ID, Aadhaar card, driving license, etc.
- Address proof such as utility bills, ration cards, bank passbook copies, etc.
- Proof of age such as passport, PAN card, etc.
- Bank statements or Salary slips for last 6 months
- Processing fee cheque
- Form 16
- ITR for the last 3 years
- Application form including a passport size photograph
Along with these, documents related to the concerned property should also be submitted while availing a mortgage loan. Be it consolidating your small debts or financing your education with a loan against property, proper submission of the aforementioned documents is necessary to proceed with the loan application.
The application procedure of a loan against property
Thanks to the advent of internet technologies, one can easily figure out how to apply for mortgage loans.
Here are the steps one needs to follow to apply for a loan against property online:
Step 1: individuals need to visit the online portal of their preferred lending institution first and collect the application form from there.
Step 2: Most of the lenders ask for the applicant’s income details so that they get the best deals as per their repayment capacity. Here, applicants can compare different combinations of loan amount and repayment tenor to check how much EMI they can afford. A mortgage loan calculator is available on the websites to help them assess their monthly obligations.
Step 3: After making the decision, one can click on ‘Apply’ and furnish the necessary documents to complete the process.
On successful verification, lenders sanction the loan amount. Some reputed financial institutions also provide pre-approved offers to make financing hassle-free. These offers are available on multiple credit advances, including home loans, loans against property, etc. To make use of such a facility, individuals should check their pre-approved offers by submitting names and contact details.
However, apart from being aware of what is mortgage loan and its offers, individuals should keep some additional factors in mind as well.
Things to consider before availing of a LAP
Here are some important pointers one should remember before applying for a loan against property:
- High LTV: Most the financiers offer up to 85% of the property’s value as a loan amount. However, it also depends on the location and physical condition of the concerned property.
- Property cannot be sold: After pledging property to obtain funds against it, the owner will not be able to sell it until he/she pays off the loan. However, in special cases, if an interested buyer wants to repay the outstanding loan amount, the property will be available for sale.
Apart from these, understanding the associated charges of a loan against property is essential beforehand. This allows borrowers to understand how much the total cost will be to avail of the loan. In order to save on EMI payments, comparing multiple lenders to find the lowest interest rate before applying for a mortgage loan is also necessary.
