Mortgage loans are a popular form of financing in India. A survey indicated that housing loan growth was estimated at around 16% in the financial year 2017-18. In 2018-19, predicted growth for this segment was approximately 19%. Loan against property is one type of credit that falls under this category.
These rising numbers depict a trend of growth, which can be traced to various factors. From government initiatives to numerous features being offered by different financial institutions, several factors have collaborated to raise the number of mortgage loan applications in India.
Among its various reasons, mortgage interest rates have been a critical factor for increased applications. Financial institutions have always offered favourable rates of interest on secured loans, though currently these rates have been made even more economical. Besides these rates, borrowers must also check a few additional features before applying for such a loan.
Basic features to check while applying for a mortgage loan are as follows:
- Substantial loan amount: Being a secured line of credit, financial institutions offer a high amount of financing to individuals applying for mortgage loan. The maximum loan amount can vary over different financial institutions. Additionally, loans against property do not have any end-use restriction, which allows its borrowers to use this sum of money for any financial necessity.
- Prompt disbursal: Secured loans usually have a long drawn verification process since it includes numerous documents. These include customer information, his/her finances and employment details, property details, etc. Despite its long list of requirements, financial institutions offer prompt disbursal, which is especially helpful if a borrower is undergoing a financial emergency. Generally, these loans are disbursed within 4 days of their application.
- Choice of tenor: Along with minimal mortgage loan documents and economic interest rates, financial institutions also offer a choice of tenor to its borrowers. Individuals availing these loans can choose up to 20 years for their repayment tenor.
- Online management: Option to control these loan accounts online is another feature, which offers convenience to its applicants. Borrowers can quickly check their remaining balance, applying for various related benefits and offers. Moreover, they can pay their EMIs online.
- Easy application: Most financial institutions provide pre-approved offers on these loans, which make their application process not just easy, but also very prompt. Such pre-approved offers are provided on many financial products like loans against property, home loans, etc. You can easily check your pre-approved offer online by providing personal details like name and phone number.
In case a borrower wants to avail further funds under similar mortgage interest rates, they can also opt for top-up loans on their balance transfer to a different financial institution.
How can balance transfer help avail better rates?
Balance transfer of such a loan offers these features mentioned below.
- Lowers repayment burden
The most important advantage of a balance transfer is reduced repayment burden for its borrowers. Typically, borrowers transfer their existing balance to a different financial institution to avail lower rates of interest, thereby reducing the financial burden on their repayment. Additionally, borrowers also clear their debt in a shorter period if they increase their EMI amounts while renegotiating this loan.
- Top-up loans
Along with lower mortgage interest rates, any individual who transfers his/her loan to a different financial institution can also avail top-up loans up to Rs.50 lakh. This additional financing is especially helpful since it does not have any end-use restriction and borrowers can repay it along with their primary mortgage loan.
- Part-prepayment and foreclosure
Individuals transferring their balance to a different financial institution can also pay a lump-sum amount to reduce or clear their debt. While the former is known as part-prepayment, this latter is known as foreclosure. Either of these is especially helpful in reducing the total repayment amount of a loan. With a reduction in tenor, loan interest is also reduced. Borrowers should learn easy steps to prepay their loan against property before beginning with its application.
Irrespective of whether a borrower is applying for a loan or transferring their balance to avail lower mortgage interest rates, it is vital to check the total repayment amount. Borrowers can easily check this amount by using an online calculator, which displays both total repayment amount and individual EMIs. Additionally, borrowers should also learn how they can avail tax benefits on their LAP. Tax exemptions on such loan products can be immensely helpful since they reduce the overall financial burden of a borrower by manifolds.