Since opting for a mortgage loan is a long-time commitment, prospective borrowers must plan their finances carefully to ensure successful repayment. Due to its low-interest rate and flexible repayment tenor, this credit option is gaining momentum day by day.
Nevertheless, before applying for this loan, one must consider ways to reduce the EMIs and the replacement burden.
6 tips to consider before applying for a mortgage loan
Before applying for a mortgage loan, individuals can use these tips to maximise LAP benefits-
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Maintain a good credit score
Individuals should always check their credit scores before applying for a mortgage loan. A good credit score will only ease the process of availing the loan. An individual’s credit score impacts the interest rate of a loan against property. It is recommended that prospective applicants maintain a score of 750 and above to convince lenders to levy an affordable interest rate. The lender perceives that the borrower will not default in payment, thereby levying a lower loan against property interest rate.
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Gather proper documents
Borrowers need to gather correct documents and submit them to the lender. Other than personal information, lenders also need to check the borrower’s proof of steady income, list of assets, financial obligations, and debts. Besides, lenders check all the property-related documents to authenticate property ownership. Nevertheless, these requirements are indicative and vary with lenders. Hence, borrowers must know the lender-specific documents to avoid delays and hassles.
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Do a thorough market research
Since the repayment tenor of a mortgage loan can last as long as 30 years, borrowers need to do thorough market research and choose a financial institution carefully. Various lenders offer different loan terms and interest rates; hence it is best to settle for a lender offering the lowest mortgage loan interest rates and best service terms.
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Avoid being in debt while taking a loan
Borrowers should make sure that they have repaid all existing loans before applying for a new mortgage loan. Along with existing EMIs, borrowers should also repay all credit card bills. The debt to income ratio of the borrower would be calculated while availing the mortgage loan.
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Calculating overall costs
Individuals can use mortgage loan calculators to calculate their monthly payables. This way, one can ensure opting for the most affordable loan against property.
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Choosing loan tenor wisely
The interest rate is influenced by the chosen loan tenor. Opting for a longer loan tenor would decrease the monthly instalments payable but increase the total interest outgo. On the other hand, individuals opting for a shorter tenor will substantially save on the overall borrowing costs. Hence, applicants should select the repayment tenor carefully.
Besides following these tips, individuals should also know how to apply for a mortgage loan. Knowing the correct procedure will only make it easier for borrowers to avail one without hassles.
Steps to apply for a mortgage loan
Here is a step-by-step guide to apply for a mortgage loan:
- Firstly, borrowers need to visit the chosen lender’s website, fill up the loan application form and attach the required documents
- Next, borrowers need to enter the property-related details and personal information, as required
- Applicants need to provide their income details and complete the application
- Next, borrowers need to wait for the loan approval
- A representative from the lender’s end will contact the applicant and take the process further.
Besides having no end-usage restrictions, individuals can also avail tax benefits from availing a loan against property. This would substantially help borrowers use the loan amount for various purposes and reasons.
Now that individuals know what is a mortgage loan, they can avail this loan and use it to meet their financial requirements. However, it is important for borrowers to know important dos and don’ts of applying for a loan against property.
Several financial institutions offer pre-approved offers to their customers to make the process of availing a loan easy and smooth. These offers are available on various secured and unsecured loans. To check their pre-approved offers, borrowers need to enter their names and contact details on the lender’s website.
Interested individuals should keep these tips in mind before applying for a mortgage loan to make repayments easy and affordable.
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