The mortgage home loan is a loan in which an individual has to keep some gold or the property documents with the bank to avail liquid cash in hand. The mortgage loans help an individual satisfy their own needs and thus utilize the funds wherever required. Banks charge an interest rate of 9-15% on a mortgage of property, while the mortgage for the gold is charged at 12-24% per annum. Banks provide a loan in case of mortgage for a period of 1 year for a gold loan while as in case of property it is 15 years on an average. The CIBIL score of an individual is not given much importance as the borrower has kept a mortgage with the bank out of which 75% of the value is given as loans. The bank has the authority to forfeit the gold or the property whatever is mortgaged in case of the loan installments are not paid on time. The bank also charges a penalty to the borrower in case of the late payment of installments. Mortgage loans are mostly taken by people who are in a financial problem and need some funds for some of the other purposes.
Mortgage loans are mostly taken by individuals for the purpose of paying the medical bills or for the marriage purpose or for the purchase of the new property. Also, the mortgage is taken by the businessmen due to loss suffered in business. A businessman may mortgage gold or property for the purpose of paying salaries to the employees, paying rent for the space, clear the bills of the debtors, expansion of the business. etc. For the purpose of the smaller requirement of loans mortgaging gold is beneficial while for major expenses mortgaging property is beneficial. In the case of the property mortgage, only the documents of the property need to be mortgaged while the borrower can still continue the usage of property during the repayment of loans during the tenure. The borrower can get 70-80% of the property value as loans from the lender depending on the market value of the property. Having proper property documents is an essential part of the loan process. The bank inspects the property and estimates the value of the property as per the market value and accordingly decides the eligibility of the loans. Though there is surety of the loans recovery bank aims that the loans provided against mortgage should not turn into bad debt.
Tips to get home loan mortgage approved:
- Ensure consistent income:
The borrower should have a proper and consistent source of income. There should not be any gaps in the income while availing the loans. The borrower should be found as a financially stable person while availing of loans as the loan should not be turned into bad debt. Also, the income of the borrower should be found sufficient to repay the loans in case of availing the loans from the bank or an NBFC.
- Maintain a good credit score:
To avoid the loans turning into non-performing assets the bank ensures that the loans should be given to the right lender who would not default on loans. Thus that having a good credit score is necessary. Maintaining a good credit score can get the task of obtaining loans easy.
- Maintain sufficient balance before obtaining the loans:
The individual who maintains a healthy bank balance in their bank accounts is considered a stable borrower. And the chances of default of the financially stable persons are very less. Thus the bank prefers the borrowers who maintain a healthy bank balance in their bank accounts.
- Make sure that that the loan amount does not exceed the repayment budget:
The borrower should take care that the amount of the loans should not be beyond the repayment capacity. Even though the market value of the property is high and the eligibility out of it is 75% of the property value the repayment of the loans should be possible to the borrower on a monthly installments basis. And the borrower should be able to repay the loans within the tenure of the loans. In case of the higher eligibility also the borrower can take a lower amount of loans for satisfying the needs of an individual.
- Keep proper documentation ready:
The borrower should have the property documents available with clear titles to avail loans from the lenders. The bank in other cases of the documentation not found to be satisfactory may reject the loans of the borrower. Also, there should not be any co-ownership in the property else than the own family member.
Conclusion:
Hence ensuring all the formalities to be completed is necessary to avoid the rejection of loans. Also, the credit limit requested should be within the budget of the borrower. Taking the home loan mortgage one can continue the usage of the property while during the repayment of loans. Also, the mortgaged documents can be taken back after the repayment of loans.
