Are you curious to know about mortgage loan interest rates?
The current economic situation prevalent in the country has traversed through significant changes. It has largely contributed to the changing mindset of the masses. An example that better demonstrates this scenario is the massive increase in the prices of goods and services. This has directly affected the spending habits of the people in general. To be precise, the middle-class lot has become more aware of their priorities. They are more informed than before when it comes to leveraging their finances. They know where to put their hard-earned money and what will give them good returns.
The same is true when it comes to opting for a loan from financial institutions people have become more aware while going for a loan from financial institutions, which is why they make a careful analysis of the mortgage loan interest, which eventually facilitates in making informed decisions.
Loans are broadly classified into two-Secured and Unsecured loans. Mortgage loans fall under the first category. It is a loan you take by pledging your asset to the financial institution.
Now let us look at a few factors that affect the interest rate for a mortgage loan.
Factors Affecting Mortgage Loan Interest Rates
Some of the factors which affect the interest rate of a mortgage loan include:-
Your credit score
A credit score is very vital for your loan to be approved. Your credit score helps the financial institution to know your repayment behavior, based on which they base their lending decisions. A good credit score is always an assurance from your side to the lender that the loan will be repaid in time shall be met. On the other hand, a poor credit score will lead to the rejection of your loan application.
Talking about the mortgage loan interest, if you possess a good credit score, the rate of interest you have to pay on your loan will be low.
Loan To Value (LTV) ratio is the percentage of a property’s value, which a financial institution grants as a loan. If the total value of the property. High loan amounts will attract higher interest rates. Therefore, if the downpayment you pay in the beginning is more, the loan amount decreases, which leads to a decrease in the mortgage loan interest rate.
The interest you pay on your mortgage loan is inversely proportional to the loan term. If the loan tenure is small, then the interest rates tend to be higher. On the other hand, it is lower for the ones with long tenure.
A property’s resale value determines the interest rates. If the financial institution foresees a good resale value for your property, it will charge lower interest rates.
What is a loan against property?
A loan against property is a type of secured loan wherein you can mortgage your property(Residential and/or Commercial) to avail of a loan from a financial institution to fund your needs.
What is the loan against property eligibility?
When you apply for a Loan Against Property(LAP), your bank scrutinizes your application to know whether or not you or eligible to avail to the said loan. Your loan against property eligibility depends upon the following:-
You are required to submit your proof of income while going for a loan against your property. You must have a stable income, which is essential to pay off your monthly EMIs.
Age plays a vital role in determining your loan against property eligibility. As and when you grow older, your potential to earn decreases. Hence, the chances of getting a loan also become low. Financial institutions grant a loan to individuals who are young and are at the start of their careers. You have to be in the age group between 21-62 years.
The financial institution requires you to specify your occupation in the loan application. You should be a working professional with a minimum of three years of experience.
You must be an Indian to avail of a mortgage loan from any financial institution, and you must produce the ID proofs which confirm the same, such as an Aadhaar card or PAN card.
A mortgage loan becomes a need for every individual at some point in life. Therefore, it is always better to stay equipped with the rules that determine the chances of getting a loan.
Having gone through the article now must be better off with the things to be kept in mind while availing of a mortgage loan. There are plenty of financial institutions you can choose from that offer affordable mortgage loan interest. They offer a mortgage loan starting from INR 50 lakhs to INR 15 crores, a high LTV ratio of 75% of the total value of the property, loan tenure of 15 years.
Therefore, go forward, avail a mortgage loan from your nearest financial institution, and make your dreams come true.