If you are looking to avail a large amount that you can use for many purposes, then you can rely on the mortgage loan facility. A mortgage loan is a type of finance that you can get by pledging your property. It is also called the loan against property (LAP). The property loan interest rates are economical as you keep your property as the collateral.
But before you apply for it, you must consider a few factors beforehand. It will help you approach and manage the loan better. Read on and know more!
1. Know the Loan Amount That You Will Get
Since you are pledging your property for the loan; you should know how much you will be able to borrow. This way, you will have an idea of an amount that you can use for many of your needs. The standard practice is that creditors provide you with a percentage of the market value of your property that you want to keep as the collateral.
2. Check out Property Loan Interest Rates
The norm of this type of finance is that the offered property loan interest rates are affordable. It is majorly because they are backed by security. But depending on the condition of your property and lender, it may differ. You may also have to choose between a fixed and a floating interest rate.
3. Be Aware of the Repayments and the EMIs That You Will Pay
The mortgage loan is backed by the collateral and may come with a long tenor of up to 20 years as per the terms of the lender. If you stretch the loan amount over a longer tenor, then it means paying reduced EMIs. But that also denotes paying more taxes. Hence, while opting for the mortgage loan, you should opt for a shorter tenor. It will help you avoid paying extra towards the property loan interest rates. The next thing to keep in mind before applying for the mortgage loan is the EMIs that you will pay. To know an exact loan EMI that you will pay, you can use the mortgage loan calculator. This tool is available on a lender’s website free of cost. Once you enter your desired loan amount, tenor and the applicable rate of interest, it will showcase the monthly EMI. Along with that, you will also know the total payable interest and the total payment amount.
4. Know if You Can Make Prepayments and Manage Fees for IT
Most lenders may ask for prepayment and foreclosure fees ranging between 2% and 4% on fixed mortgage loan rates. Therefore, it is vital to check the charges if you want to foreclose the loan or prepay it. Prepaying an ongoing loan is a smart step to reduce your EMI amount and the rate of interest. It means that you will be able to pay off your debt earlier than the scheduled tenor. Foreclosing the loan means paying off the remaining loan amount before the scheduled tenor. It makes you debt-free, which is an incredible feeling!
5. Know if You Can Avail any Tax Benefits or Not
If you are availing the mortgage loan for the purpose of housing needs, then you can enjoy tax benefits. Section 24 B of the Income Tax Act has the provision for interest exemptions of up to Rs.2 lakh on mortgage loans. It means that if you want to use the loan amount to buy a plot, land or building a house, then you can ask for deductions.
6. Compare Property Loan Interest Rates of Lenders
Before you go ahead and apply for the mortgage loan, you should also ensure comparing the mortgage loan rates of all available lenders. You can do that by landing on a third-party website and comparing all available offers. This way, you can select the best offer that suits your needs and repayment capacity.
If you consider the discussed aspects, then you will be in a better position to apply for an ensuing mortgage loan. The mortgage loan is a long-term financial facility that will affect your income for a long. And it is why considering the aforementioned elements will make you approach your upcoming loan with confidence.