What is Mortgage Loan: Eligibility, EMI, and Interest rates

In India, purchasing a home is a significant milestone in one’s life, often supported through mortgage loans. But what are these mortgage loans? And can you use one to build your next home as well? In this blog, we will take you through what it means, what are the requirements to be eligible for such loans and more. 

What are Mortgage Loans?

Mortgage loans, often referred to as home loans, are secured loans where the borrower gives the lender a conditional ownership of the property (collateral) until the loan is repaid in full. If the borrower defaults, the lender has the right to seize the property to recover the loan amount. These loans are specifically used to purchase property or land, construct a house, or renovate an existing property.

Types of Mortgage Loans in India

Understanding the different types of mortgage loans available can help borrowers choose the best option according to their needs:

1. Home Purchase Loans: These are the most common type of mortgage loans used to buy a new residential property or an old house from its previous owner.
2. Home Construction Loans: Specific to those who want to construct a new house on a pre-owned piece of land.
3. Home Expansion/Extension Loans: These loans are taken for expanding or extending an existing house, such as adding an extra room.
4. Home Conversion Loans: These loans are available for people who have financed their present home with a home loan and wish to purchase and move to another home for which additional funding is required.
5. Land Purchase Loans: Used for purchasing land for both investment and construction purposes.
6. Balance Transfer Loans: Allows you to transfer your existing home loan to another lender with better interest rates and terms.
7. Home Improvement Loans: For making improvements like painting, plumbing, and electric works in your home.

Each type of loan has specific terms based on the purpose of the loan, and it’s crucial to understand these distinctions before proceeding.

Read more: How to get personal loans for self-employed in India

Eligibility Criteria for Mortgage Loans in India

The eligibility for a mortgage loan in India varies by lender, but the general criteria include:

• Age: The borrower should typically be between 18 to 65 years.
• Income: There should be a steady source of income, and many banks have a minimum salary requirement.
• Employment Status: For salaried individuals, a minimum of 2-3 years of employment is required, and for self-employed individuals, a stable business record of at least 5 years is often necessary.
• Credit Score: A good credit score (usually 750 or above) is crucial for loan approval at favourable interest rates.
• Property Value: The property you wish to purchase should have a clear title and be approved by the local municipal corporation.

Calculating EMI for Mortgage Loans

EMIs or Equated Monthly Instalments are the monthly payments a borrower makes to repay a mortgage loan. These payments include both the principal amount and the interest. The EMI amount depends on the loan amount, the interest rate, and the loan tenure. You can use the Airtel Personal Loan EMI calculator to find out how the EMI for your mortgage loan will be affected. 

Read more: What are personal loan foreclosure charges?

Interest Rates on Mortgage Loans

Interest rates vary widely between lenders and depend on factors like the RBI’s policies, economic conditions, the borrower’s credit score, and the loan amount.

Mortgage loans in India are a viable option for those looking to invest in property, provided they meet the eligibility criteria and commit to the repayment structure. It’s advisable to compare different lenders and negotiate the best terms to ensure that your home buying experience is as smooth and cost-effective as possible.

Read more: What are the documents required for a personal loan?

Want loans? Choose Airtel Flexi Credit for renovating your home

Why provide your house as a collateral if you only need a small amount as loan? Avoid the risk and problems associated with mortgage loans and choose Airtel Flexi Credit personal loans. Get a personal loan with very few documents, without any collateral and in just 24 hours!

Pay back your personal loan with the help of easy EMIs. The low interest rates and flexible tenure options also make it easy for everyone. In addition, the application process for the personal loan is 100% digital. You just have to download the Airtel Thanks recharge app and go to the Airtel Finance section to apply.

Apply for your personal loan, get credit approval in an instant, submit the documents and get your loan amount disbursed in just 24 hours!