What is a Mortgage Loan: Meaning & How to Apply in India

In the current financial landscape, various financing options are available to meet the diverse requirements of borrowers. Each one of these different types of loans comes with its own set of advantages. Especially when it comes to collateral-backed financing, there are plenty of options available in the market. Mortgage loans are among the most popular choices of borrowers looking for long-term finance.

Table of Content

• What is a Mortgage Loan?
• Difference between Mortgage Loan and Home Loan
• Benefits of Mortgage Loans
• Eligibility Criteria
• Required Documents
• How to Apply?

What is a Mortgage Loan?

A mortgage loan is a type of secured loan where an individual can borrow money by pledging a real estate property as collateral. This means the lender will have the temporary right over that property, and the borrower can reclaim the ownership once the loan amount is fully paid. The funds obtained through a mortgage loan can be used for various purposes, such as purchasing a new property, business expansion, home renovation, etc.

Like any other financing option, this loan is repaid in equated monthly instalments over a specified tenure, including interest. Currently, a large number of lending institutions offer mortgage loans at competitive interest rates and with flexible repayment options.

Difference between Mortgage Loan and Home Loan

Mortgage loans and home loans are two terms often used interchangeably. While these two are closely related, they are two different types of loans. A home loan is a financing option used specifically to purchase a home. A mortgage loan, on the other hand, is a type of loan secured by real estate as collateral.

Benefits of Mortgage Loans

• Easy Availability of Funds: Availing a mortgage loan allows you to get quick access to funds without having to wait for several days or weeks. From purchasing a new property to constructing or renovating an old one, you can take care of various expenses with these loans.
• Lower Interest Rate: As compared to several other popular financing options, mortgage loans are available at lower interest rates. Since these are secured loans, lending institutions also have some security in the form of collateral. Additionally, the borrowing terms of these loans are also a lot more favourable.
• Flexible Eligibility Criteria: Mortgage loans are immensely popular among borrowers due to their flexible eligibility criteria. Since this loan is secured with collateral, lending institutions have a less-stringent process for sanctioning a loan.
• Ease of Repayment: These loans often come with longer loan tenures, typically ranging from 15 to 30 years. This allows one to pay off the loan very easily. You can choose the tenure according to your financial condition and repayment capacity.
• Improved Credit Score: Borrowers with a poor credit history can also benefit from mortgage loans. They need to make timely payments for their loan without any misses, and it will lead to a significant improvement in their CIBIL score.

Suggested Read: Personal Loan vs Mortgage Loan: A Detailed Comparison for Borrowers

Eligibility Criteria

While the eligibility criteria for mortgage loans can slightly vary from one lending institution to another, basic requirements always remain the same. These are:

• The applicant must be an Indian citizen.
• His/her age should be between 21 and 65 years.
• Having a stable income source is a must, whether the applicant is self-employed or salaried.
• The property that is being pledged should have a clear property title without any legal disputes.
• The applicant should have a satisfactory credit history as well.

Required Documents

• PAN and Aadhaar Card
• Salary slips or income tax returns
• Bank statements (last 6 months)
• Property ownership documents
• Address proof

Suggested Read: What Is the Difference Between Pledge, Hypothecation and Mortgage?

How to Apply?

While exploring this financing option, it is crucial to understand the procedure of obtaining the loan. Like any other secured loan, mortgage loans also have a quick and straightforward application procedure.

• The very first step is to fill in the loan application form. This can be done either online or at a physical branch of the lending institution.
• You need to submit all the necessary documents along with the form. It is best to ask for a list of required documents well in advance to avoid any last-minute hassle.
• Once done, the lender will perform a property evaluation. This will help them assess the market value of the pledged asset and determine the loan amount you’re eligible for.
• After this assessment, the loan is sanctioned and the funds are released.

Sometimes, this process may vary slightly, as a few lending institutions have a couple of additional steps.

Mortgage loans are undoubtedly one of the most preferred financing options available these days. Are you also planning to apply for one and looking for a reliable lender? Well, your search ends here! At Muthoot Finance, we offer quick and hassle-free mortgage loans at highly competitive interest rates. To apply, you can reach out to us and submit your query. From loan application to document submission, everything can be done online. For more information, you can also visit the nearest Muthoot Finance branch.