Mortgage loans are secured loans where one has to pledge a valuable asset as collateral in order to secure credit. These are high-value and long-term commitments that come with a number of prerequisites and considerations.
Therefore, with careful consideration of factors like mortgage, interest rate, asset value, tenor, etc., one can strategize taking and repaying a loan efficiently and cost-effectively.
6 Things to consider before applying for a Mortgage Loan:
One must carefully consider the following factors before applying:
Evaluating the property value
When applying for a home loan, it is essential to evaluate the property carefully. For example, if the property is in a prime location in the city, the lender may offer a higher loan amount with a lower interest rate. This is because the lender knows that if the borrower is unable to repay the loan, they can quickly gather the loan amount by selling the property.
On the other hand, properties that are in a remote location or are in a poor state may not fetch a reasonable amount.
Moreover, lenders may cancel the loan application altogether if it brings little or no value to the market. Hence, one must have a precise evaluation of their property before applying for the loan.
Checking eligibility criteria and documents before applying
Lending institutions have different mortgage loan eligibility criteria. As a result, it is critical for the borrower to thoroughly understand the requirements before approaching a financial institute for a loan. This saves time and reduces the possibility of the loan application being rejected.
Individuals can visit the lender’s website to find out the documents needed to apply for a loan against property. Moreover, they can use an eligibility calculator to determine the necessary amount quickly beforehand.
Comparing offers made by several lenders
Borrowers must refrain from taking an offer from just any lender they come across. This is because the mortgage loan interest rates will have a significant impact on the EMIs they will have to pay over the next 15 to 30 years. Before applying for a loan against property, one should compare the rates of various financial institutes.
Several lenders allow borrowers to compare rates from multiple banks and NBFCs simultaneously to save time and effort. So, after comparing the loan interest rates, loan applicants will be able to select the lender with the lowest rate and save a considerable amount of cash in the long run.
Moreover, many lenders provide pre-approved offers to existing customers to accelerate the loan approval process. These offers are available on numerous products, including LAP and home loans. Credit seekers can check their pre-approved offers by entering basic information like name and contact details.
Maintaining a healthy credit history.
When one has a good credit score, obtaining a mortgage loan is simpler. In addition, borrowers should know how credit score affects loans against property eligibility and helps to secure lower rates.
A solid credit history demonstrates that the individual has made on-time payments on all prior loans and EMIs. As a result, customers gain the lender's trust and may qualify for credit with a lower interest rate or a larger loan amount.
Calculating EMI in advance
To choose the loan amount, one needs to calculate the monthly instalments in advance. However, if this is done manually, the results may often contain errors. That's why it will be wise to use an online mortgage loan calculator to get quick and accurate results.
Choosing the right tenor to balance between interest rates and EMIs
Mortgage loans, such as loans against property, offer an extended tenor, generally up to 18 years. A lengthier tenor reduces the EMI burden as the loan amount gets divided over an extended period. However, it also raises the mortgage loan interest rate, which means that the borrower has to pay a larger amount in total. Therefore, based on requirements, one must choose the right tenor to get a favourable interest rate and reduce the EMI burden.
Considering the above-mentioned factors before applying for a mortgage loan can benefit loan-seekers greatly. These loans are long-term commitments that require effective planning to reduce the EMI burden over time. One of the best ways to do this is by calculating the mortgage loan interest rate and tenor over which one repays the loan before actually applying.