Top 6 Reasons to Opt for a Mortgage Loan

Mortgage Loans / Loan Against Property (LAP)

A loan against property(LAP, Mortgage Loan) is a secured loan that is sanctioned against the asset pledged as collateral. This asset can either be an owned land, a house, or any other commercial premises. The asset remains as collateral with the lender until the entire loan against property amount is repaid. A mortgage loan (LAP) is one in which you secure funds by pledging your property. The interest rates on mortgage loans range from 9.15% Onward p.a. Usually, the amount of funding you can avail will be up to 60% to 70% of the Market value of the property.

Now, Get a Quote of More than 20+ Financial Institutions for Mortgage Loan

Lender	Interest Rate (p.a.)	Loan Amount
HDFC Bank	10.25 % Onwards	Up to 60%-65% of the mortgaged property’s market value
ICICI Bank	9.35% Onward	Up to 60%-65% of the mortgaged property’s market value
Axis Bank	9.60% Onwards	Up to 60%-65% of the mortgaged property’s market value
Citibank	9.45% Onwards	Up to Rs.5 crore
LIC HFL	9.50% Onwards	Up to 60% of the property’s market value
PNB Housing Finance	9.80% Onwards	Up to 60% of the property’s market value
IDFC Bank	Up to 9.50%	Up to 60% of the property’s market value
Karur Vysya Bank	10.00% Onwards	Up to Rs.3 crore
Union Bank of India	9.80% Onwards	Up to Rs.10 crore
IDBI Bank	10.20% Onwards	Up to Rs.10 crore

Top 6 Reasons to Opt for a Mortgage Loan in India

A person can take out a mortgage loan for several reasons. Here are the top 6 reasons why people should opt for mortgage loans in India.

1) Mortgage Loans Come with Lower Interest Rates

A loan against property is taken while keeping a fixed asset, like a house or commercial property, as collateral. The interest rate is usually lower when compared to other loans, such as personal loan. Mortgage loan interest rates typically range between 11% and 15%.

2) Lower to No Prepayment Charges

Lenders such as banking institutions don’t levy any kind of prepayment charges for loans against property. This is one major reason people opt for a mortgage loan.

3) Mortgage Loan Is Easy To Get & Has Longer Tenure

As a mortgage loan is a secured loan, you can easily get it through banks. The biggest advantage of having a property loan is that it is available for a longer tenure. The tenure can go up to 15 years. That’s more than a decade, and it is a good enough time to repay it properly. On the other hand, other types of loans, such as personal loans, only go up to 7 years. This is far less than a loan against property.

4) Mortgage Loans Come with Lower EMIs

Another practical reason to opt for a mortgage loan is the lower EMIs. The longer you have to repay your loan against property, the lower your EMI will be. People tend to choose mortgage loans because they generally cannot afford to pay higher EMIs.

5) Mortgage Loans Improve Your Overall Credit Rating

A mortgage loan, like any other loan, allows people to build a good credit score. A good credit score improves and lowers your future cost of borrowing. However, the credit rating could also be negatively affected if the loan is not paid back in full. In such a case, your overall ability to obtain any type of loan will be greatly reduced.

6) You Get to Enjoy Tax Benefits

With a loan against property, you get to enjoy tax benefits as well. However, in order to claim deductions, you must be able to demonstrate that the mortgage loan was used for business expenses or to purchase residential property.

Different Types of Interest Rates on a Mortgage Loan

While paying the mortgage, you can opt for two types of interest rates. Fixed and floating interest rates. First, let us understand what these interest rates are.

Fixed interest rate

As the name suggests, the fixed interest rate remains constant for the whole loan tenure. The changes in the market do not affect the interest rate. This is why many people prefer fixed interest rates. It helps the borrower keep away from any kind of financial risk while giving them the freedom to pay back the loan amount in monthly installments.

Floating interest rate

The floating interest rate keeps changing as per the repo rate and market fluctuations. As the name suggests, the floating rate changes periodically. It is directly impacted by the fluctuations happening in the markets. However, many people prefer to opt for this rate of interest as many times the variable declines owing to market conditions. In such a case, the borrowers also end up paying a lesser interest amount.

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