A mortgage loan is like a long-term partnership with a bank or financial institution that helps you buy a home or property. It's a commitment where you agree to make regular payments over many years, usually 15 to 30, until you've fully paid off the loan. Think of it as a way to spread out the cost of your dream home over time. The loan is secured by the property you're buying, giving the lender confidence in your repayment.
When choosing a mortgage, you'll have options like fixed or adjustable interest rates, and it's important to consider the impact interest has on the overall cost of homeownership.
Mortgage Loan Interest Rates, Loan Amount & Tenure By Banks
Explore & compare your best choice in interest rates, starting and maximum loan amounts, tenures, processing fees, and even additional features offered by each bank.
For the most competitive mortgage loan for your financial situation refer to the table below:
| Bank | Interest Rate (Floating) | Starting Loan Amount | Maximum Loan Amount | Maximum Tenure | Processing Fee |
| HDFC | 8.85% - 9.40% | ₹2 lakh | ₹10 crore | 30 years | Up to 0.50% of the loan amount |
| SBI | 8.95% - 9.55% | ₹1 lakh | ₹5 crore | 25 years | Up to 0.50% of the loan amount |
| ICICI Bank | 8.70% - 9.25% | ₹1 lakh | ₹7.5 crores | 25 years | Up to 0.50% of the loan amount |
| Axis Bank | 8.90% - 9.45% | ₹50 lakh | ₹5 crore | 20 years | Up to 0.50% of the loan amount |
| Kotak Mahindra Bank | 8.95% - 9.50% | ₹50 lakh | ₹2 crore | 20 years | Up to 0.50% of the loan amount |
| Bank of Baroda | 8.40% - 10.60% | ₹1 lakh | ₹5 crores | 25 years | Up to 0.50% of the loan amount |
| Canara Bank | 8.55% - 11.75% | ₹1 lakh | ₹5 crores | 25 years | Up to 0.50% of the loan amount |
| Union Bank of India | 8.35% - 9.25% | ₹1 lakh | ₹5 crores | 30 years | Up to 0.50% of the loan amount |
| IDBI Bank | 8.45% - 9.45% | ₹1 lakh | ₹10 crores | 30 years | Up to 0.50% of the loan amount |
| PNB Housing Finance | 8.80% - 9.80% | ₹1 lakh | ₹5 crores | 25 years | Up to 0.50% of the loan amount |
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Mortgage Loan Eligibility
1. Credit Score: Aim for a score above 750 for optimal interest rates and loan offers.
2. Income and Employment: Provide salary slips, bank statements, and employment proof to solidify your financial standing.
3. Debt-to-Income Ratio (DTI): Ideally, aim for a DTI below 40% to ensure manageable repayments.
4. Down Payment: Putting down a larger percentage of the total property cost showcases financial commitment and reduces the loan amount, potentially unlocking better terms.
5. Property Age and Location: Lenders often have specific preferences regarding property age and location due to risk considerations. Newer properties in desirable locations typically have higher eligibility.
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Documents Required for Mortgage Loan
By preparing these documents, you ensure an efficient application process. It helps to start the process easily and at the earliest:
1. Address Proof: Recent utility bills (electricity, water, telephone), rental agreement, or property tax receipt (copies)
2. Income Proof: Salary slips for the past 3 months, Form 16 for the past 2 years, and ITRs for the past 3 years (for salaried individuals)
3. Business Income Proof: Income tax returns, balance sheets, and profit and loss statements for the past 3 years (for self-employed individuals)
4. Bank Statements: Savings and current account statements for the past 6 months.
5. Property Documents: Sale deed, agreement of sale, property tax receipts, building plans, and encumbrance certificate (if applicable).
6. Processing Fee Payment Proof: Receipt or transaction confirmation for the processing fee
Mortgage Loan EMI Calculator
With the EMI (Equated Monthly Installment) Calculator you can estimate your monthly payment based on your desired loan amount, interest rate, and loan tenure.
You can use the calculator by simply entering the loan amount, interest rate, and loan tenure, and it will provide you with the monthly EMI (Equated Monthly Instalment) amount.
| Monthly EMI | ₹86 |
| Principal Amount | ₹1,000 |
| Total Interest | ₹32 |
| Total Amount | ₹1,032.00 |
The EMI Calculator operates on a straightforward mathematical formula, translating your desired loan parameters into a tangible monthly payment:
EMI = [P x R x (1 + R)^N] / [(1 + R)^N - 1]
where:
P - represents the loan amount
R - denotes the monthly interest rate (annual interest rate / 12)
N - signifies the loan tenure in months
So if you are planning to avail a loan of ₹15,00,000, with an interest rate of 9.20% p.a., for a loan tenure of 20 years or 240 months, then here’s the payable EMI:
P = ₹15,00,000
R = 9.20% per annum or 0.0076667% per month (9.20/12x100)
N = 240 months
EMI = [P x R x (1 + R)^N] / [(1 + R)^N - 1]
After putting the values in the formula, the EMI will be:
= [15,00,000X.00767X(1+.00767)^240]/
[(1+.00375)^240-1]
EMI = ₹ 2,205/-
So, the EMI for a ₹15,00,000 loan at an interest rate of 9.20% per annum for a tenure of 20 years is ₹ 2,205/-
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Types of Mortgage Loan
Mortgage loans can be of different types. Let’s go through the different types of mortgagloans from below:
Fixed Rate Mortgage Loans
This gold standard of mortgages offers a fixed interest rate throughout the entire loaterm. Your monthly payments remain consistent, providing peace of mind and budget predictability. Ideal forisk-averse borrowers seeking long-term stability.
Variable Rate Mortgage Loans or Floating Rate Mortgage Loans
Also known as floating-rate mortgages, these loans offer interest rates that fluctuate witmarket conditions. Floating-rate mortgage loans may be appealing to borrowers when interest rates arexpected to decrease, as they can benefit from lower payments, but they also carry the risk of highepayments if interest rates rise.
Adjustable-rate Mortgage Loan
ARMs combine the predictability of fixed rates with the flexibility of variable ones. Theoffer a fixed rate for an initial period (e.g., 5 years), followed by adjustments based on an index like thprime rate. Ideal for borrowers expecting income growth or willing to refinance later for a fixed rate.
Simple Mortgage Loan
In this traditional loan, the lender can take the property if the borrower fails to makpayments. Typically, to close short-term needs such as business loans or bridge loans, they often come withigher interest rates due to the increased risk for the lender.
Usufructuary Mortgage Loan
The lender gains temporary use and income from the mortgaged property, such as agriculturaland or business property. The borrower retains ownership throughout the loan term. This option can bbeneficial for unlocking capital while retaining property control.
Subprime or Sub Mortgage Loan
Subprime mortgages cater to borrowers with lower credit scores, often at higher interesrates and stricter terms. While offering access to homeownership, it's crucial to carefully assess the riskand potential long-term costs before considering this option.
English Mortgage Loan
Common in India, this loan involves transferring full legal ownership of the property tthe lender, with the borrower repurchasing it upon full repayment. Lower interest rates are offered, busignificant equity and a strong financial commitment are required.
Things to Consider Before Applying for Mortgage Loan
Before you take this significant financial step, it's important to carefully consider several key factors and commitments that come with a mortgage loan.
Here are some important things to keep in mind before applying for a mortgage loan:
1. Credit Score: Before applying for a mortgage, review your credit report, and take steps to improve your credit score if necessary.
2. Financial Stability: Ensure that you have a stable source of income and manageable debt levels before applying for a mortgage.
3. Down Payment: Evaluate your savings and determine the down payment amount that works best for your financial situation.
4. Loan Options: Understand the features and requirements of each option to determine which one aligns best with your long-term financial goals.
5. Closing Costs: Factor in the closing costs associated with obtaining a mortgage loan, which may include fees for appraisal, title insurance, and loan origination.
6. Homeownership Expenses: In addition to the mortgage payment, consider other expenses such as property taxes, homeowners insurance, and maintenance costs.
How to Apply for a Mortgage Loan
Applying for a mortgage loan is a significant financial decision that requires careful consideration and preparation.
Understanding the mortgage application process is essential. Here's how you can apply for a mortgage loan:
1. Gather Financial Documents: Lenders will require various financial documents to assess your financial stability and ability to repay the loan. Gather documents such as tax returns, bank statements, and proof of other assets or income sources.
2. Research Lenders: Research different lenders and mortgage products to find the best fit for your needs.
3. Complete the Mortgage Application: When you're ready to apply for a mortgage, complete the lender's mortgage application form. Be prepared to provide detailed information about your employment history, income, assets, and debts.
4. Underwriting Process: This involves verifying the information provided in your application, assessing the property's value, and determining your eligibility for the loan.
5. Closing Process: After your mortgage application is approved, you'll move on to the closing process. This involves signing the final loan documents and paying any closing costs associated with the loan.
Features & Benefits of Mortgage Loan
Mortgage loans offer a range of features and benefits that make them an attractive option for individuals and families seeking to purchase a home. Here are some of the key features and benefits of mortgage loans:
1. Long-Term Financing: Mortgage loans typically offer long repayment periods, often ranging from 15 to 30 years. This allows borrowers to spread out the cost over an extended period, making monthly payments more manageable.
2. Fixed and Adjustable Rates: Fixed-rate mortgages provide stability by locking in a consistent interest rate for the life of the loan, while adjustable-rate mortgages may offer lower initial rates and the potential for future rate adjustments.
3. Tax Benefits: Homeowners may be eligible for tax benefits related to mortgage interest payments and property taxes.
4. Building Equity: As you make mortgage payments, you build equity in your home, which represents the value of the property that you own outright.
5. Flexibility: Mortgage loans come with various options and features, such as the ability to make extra payments, and refinance the loan. Or choose different loan terms, providing borrowers with the flexibility to tailor the loan to their specific goals.
6. Potential for Appreciation: Real estate properties have the potential to appreciate over time, which can result in long-term financial gains for homeowners.
7. Access to Affordable Housing: Mortgage loans make it possible for individuals and families to access affordable housing options that may not be feasible without financing.
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Frequently Asked Questions
A mortgage is a specific type of collateral, with collateral being a broader term encompassing various assets securing a loan.
The maximum tenure for a Loan Against Property typically ranges from 15 to 20 years.
To apply for a mortgage loan through the Buddyloan app, download the app, fill in the required details, and follow the user-friendly application process.
Moratorium options on Mortgage Loans may be offered by banks during specific periods or financial crises, allowing borrowers to temporarily defer loan payments.
To secure the best Mortgage Loan scheme, compare offers from various lenders, consider interest rates, tenure, and repayment terms, and choose the one that suits your financial needs.
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