What is a Mortgage Loan and How Does it Work?

There are different types of loans against property available in India and a mortgage loan is the most favoured option. To know what is mortgage loan you can go through this article. 

What is the meaning of a mortgage loan?

In simple terms, a mortgage is a transaction between a borrower and a lender. Mortgage loans mean the process of offering something as collateral while taking a loan. You may find the term mortgage loans under secured loan options. A mortgage can be used for getting a home loan, a loan against commercial property, a lease rental discount and a loan against residential property. 

How does a mortgage loan work?

A mortgage loan can be taken by a person or business to finance the purchase of a property without paying the entire price in advance. A guarantor needs to repay the loan amount with interest over a fixed duration of time till they become complete owner of it. If the borrower fails to repay the amount, the lender has the option to seize ownership of the property, sell the property, and use the money to repay the loan amount.

Types of properties eligible for mortgage loans

You must know whether the property you want to pledge is eligible for a mortgage or not. Here is a list of properties that you can use as collateral: 

• A self-occupied residential property that you own

• A rented residential property owned by you

• A vacant or in-use commercial property that you own

Apart from these, you can also pledge a property that you co-own with your relative. However, in situations like these, loans must be availed jointly by the co-owners as co-applicants. Furthermore, to get exact measurements of your property you can use a land measurement calculator online to get accurate results. 

How to check eligibility for a mortgage loan online?

You can avoid loans against property rejections by checking the amount eligible against your property. Follow these few simple steps: 

1. Select the type of property you want to pledge and your employment status

2. Check the approximate value of your property by using a loan-to-value calculator

3. Assess the amount you are eligible for from the lender online

4. Choose a tenor and interest rate to calculate your EMIs 

How to calculate EMIs online?

The formula used by a mortgage loan EMI calculator is:

EMI = [P x R x (1+R) ^N]/[(1+R) ^N-1]

In this formula:

P stands for the principal amount of the loan one borrows,

R stands for the applicable rate of interest,

N stands for the tenor or number of EMIs to be paid.

Calculating the EMIs manually can be difficult as the process is long and there are high chances of error. To avoid any mistakes you can use a mortgage calculator to get error-free results instantly.

Several institutions in India also have the availability of a pre-approved loan section for loans against property and home loans with lucrative offers. All you need to do is enter your basic details like name and phone number to know about them. When you accept these special loan offers, you can substantially expedite the overall property loan application process.

Mortgage loans are one of the best ways to secure a loan fast with a high acceptance rate. Through this option, you can get a sizeable amount at competitive interest rates. To know about the current loan against property interest rates you can contact your lender. Before applying it is important that you understand what is a mortgage loan to avoid future hassles.