Mortgage Loan

A mortgage loan is a secured loan where you pledge an immovable asset—such as a house, plot, or commercial property—as collateral to borrow funds. A common type of mortgage loan is a Loan Against Property (LAP), which is used to raise funds by pledging an existing property. This is different from a home loan, which is used for purchasing or constructing a new home.

Mortgage loans help property owners unlock the value of their asset without selling it. Interest rates typically start around 8.99% p.a., and repayment tenures may extend up to 20 years. Depending on the lender, you can borrow up to 70–80% of the property’s registered value.

Once the borrower repays the complete loan amount and interest, the lender returns the property documents and the ownership title remains with the borrower.

The purpose of a mortgage loan depends on the type of mortgage you apply for. Under the mortgage loan category, funds can be used for various needs:

For Home Loans (Property Purchase or Construction):

• Purchase a new home
  

• Construct a residential property
  

• Renovate or repair an existing home
  

For Loan Against Property (LAP):

• Consolidate high-interest debts
  Fund business expansion or working capital

• Pay for large expenses like education or medical treatments
  

• Cover weddings, travel, or other personal needs
  

• Refinance an existing mortgage for better terms
  

A mortgage loan—especially LAP—can help you meet a wide range of personal and business requirements. However, usage rules differ by loan type, so it’s best to check with your lender to confirm whether your intended purpose is allowed.

Here is how the process generally works and the benefits it offers borrowers:

• Collateral-Based Security

The property pledged as collateral mitigates the lender’s risk and facilitates access to higher loan amounts at competitive interest rates. This arrangement provides borrowers with greater financial leverage while maintaining lender security.

• Loan Agreement

A mortgage loan agreement is a legally binding contract between the borrower and the lender. It outlines the terms and conditions of the loan, including the loan amount, interest rate, repayment schedule, and consequences of default. When it comes to mortgage loans available in India, it is important for the borrower to fully understand the loan terms before signing.

• Structured Repayments

Loans are repaid through equated monthly instalments (EMIs) that include both principal and interest. This structured repayment schedule ensures predictable, manageable obligations throughout the mortgage loan tenure.

• Flexible Refinancing

Mortgages can be refinanced when market interest rates decline, enabling borrowers to reduce their repayment burden. Refinancing also allows modification of loan terms to better align with evolving financial circumstances.

• Reverse Mortgage Advantage

Senior homeowners can convert a portion of their home equity into a steady stream of income. This facility enhances liquidity and provides financial stability during retirement.

• Monthly Payments

Monthly payments consist of both principal and interest portions. While the principal portion reduces the loan amount, the interest portion remains dependent on the outstanding loan balance. Over time, as the loan is paid down, the interest portion decreases, and the principal portion increases.

• Default and Foreclosure

In case of default, the lender has the legal right to initiate foreclosure proceedings. This can result in the sale of the property to recover the loan amount. Borrowers should be aware of the implications of missed payments and the potential for foreclosure, which may negatively impact their credit score.

Various financial institutions offer mortgage loans at competitive interest rates. However, these rates can vary depending on the lender and the type of mortgage loan selected. Below is a list of loan against property interest rates offered by leading lenders on Bajaj Markets:

*Disclaimer: The mentioned details are subject to change at the lender’s discretion.

There are several types of Mortgage Loans available in India:

• Loan Against Property: Offered against residential or commercial property pledged as collateral, these loans are repaid through EMIs.
• Loan Against Commercial Property: Generally chosen by business owners, these loans are secured against commercial premises such as offices or shops.
• Lease Rental Discounting: Lenders provide this type of loan against leased properties, where the expected rent is factored into the EMI payments.
• Second Mortgage Loan: If you already have an existing property loan, you can secure an additional loan on the same property, making it essential to manage both EMIs simultaneously.
• Reverse Mortgage: Designed for senior citizens, this option allows homeowners to mortgage their property and receive regular payments from the bank in return.

Based on the legal framework, Mortgage Loans can also be categorised as follows:

• Simple Mortgage: In a simple mortgage, you keep possession of the property and authorise the lender to sell it if they default.
• Usufructuary Mortgage: In this arrangement, the lender takes possession of the property and can use it to earn income from it until the loan is repaid.
• English Mortgage: Defined under Section 58(e) of the Transfer of Property Act, 1882, this type involves a complete transfer of ownership to the lender until repayment. This makes it less common due to its complex terms.

To qualify for a Mortgage Loan available on Bajaj Markets, you should meet the following requirements:

• Your age must be between 21 and 70 years.

• You must have a minimum monthly income of ₹30,000.

• If salaried, you must have a work experience of at least 1 year.

• If self-employed, you must have a work experience of at least 2 years.

• Ideally, you should have a CIBIL score of 700 or above, as most lenders prefer applicants with a good credit score.

• The property you pledge as collateral must be legally clear and free from any disputes. Lenders prefer properties with good market value, ideally in prime locations.

• Some lenders may require you to demonstrate your ability to handle unexpected expenses. Having liquid assets such as savings accounts or fixed deposits may strengthen your mortgage loan application.

Please note that these are common criteria that most lenders require. Exact requirements may vary depending on the lender’s policies, so ensure you confirm the full list before applying.

Keeping the necessary documents ready can make your Mortgage Loan application smoother. The paperwork you may need to submit is as follows:

The lender may also ask you to submit additional documents. Ensure that you provide all requested paperwork promptly to avoid delays in processing your mortgage loan application.

Before you apply for a Mortgage Loan, keep in mind the following factors:

• Mortgage Loan Interest Rate

Compare interest rates across lenders to find the most affordable option

• Loan Tenure

Choose a repayment tenure that aligns with your financial stability and long-term goals

• Loan-to-Value (LTV) Ratio

The LTV ratio determines how much of your property's market value can be financed. A higher LTV means a larger loan but may come with stricter terms.

• Processing Fees and Charges

Be aware of any additional fees, such as processing charges, that may increase the total cost of the loan

• Property Valuation

Ensure that your property is accurately valued. This will have a significant impact on the LTV ratio and, consequently, the loan amount offered to you.

• Repayment Capacity

Assess your financial ability to repay the loan. Consider your current income and expenses before making any financial decision.

To apply for a Mortgage Loan or a Loan Against Property on Bajaj Markets, follow the steps listed below:

1. Click on ‘Check Offer’ on this page

2. Select your Profession and enter your mobile number in the application form

3. Click on the ‘Apply Now’ button to submit the application form for review

4. The lender will review and verify the information provided

5. An executive from the lender will contact you to discuss further steps and any additional documentation required

6. Once approved, the lender will sanction and disburse the loan according to their process

Managing mortgage repayments effectively can help reduce interest costs significantly. Repayment requires careful planning and financial discipline. Key strategies to consider include:

• Opt for a shorter tenure to minimise the total interest payable

• Make part-prepayments whenever surplus funds are available to reduce both principal and loan tenure

• Gradually increase your EMI amount as your income grows to accelerate repayment

• Make payments more frequently if permitted by your lender, such as through fortnightly instalments

• Pay a higher down payment upfront to lower the loan amount and reduce EMIs

• Refinance your loan if more favourable interest rates or terms are available elsewhere

• Utilise bonuses or windfalls to make lump-sum repayments, lowering the outstanding balance

• Track repayment progress using an EMI calculator to plan finances efficiently

Choosing the right mortgage loan can have a significant impact on long-term financial stability. By carefully evaluating your finances and assessing loan features, you can identify a mortgage that best meets your requirements.

• Check Your Finances: Assess your income, existing EMIs, and credit score to determine your repayment capacity accurately
• Set a Budget: Choose a loan amount and tenure that comfortably align with your financial situation
• Understand Loan Options: Compare different types, including fixed-rate, floating-rate, and loans against property, to identify the most suitable option
• Compare Lenders: Evaluate banks and NBFCs based on interest rates, loan terms, and flexibility to ensure optimal benefits
• Check LTV Ratio: Understand the maximum portion of your property’s value that you can borrow
• Account for Extra Costs: Consider processing fees, additional charges, and prepayment conditions before finalising the loan
• Research Lender Reputation: Select institutions with a track record of transparency and reliable service.

In conclusion, if you wish to access funds quickly at lower interest rates, a mortgage loan is an excellent option. To get a mortgage loan, you only need to pledge your immovable asset, whether residential or commercial, as collateral. 

Mortgage loans come with competitive interest rates, and once you repay the loan and interest in full, the title of your property is returned to you.