Understanding Mortgages – Part 1
Building a house used to be a generational achievement in our country but that has changed quite a bit thanks to the influx of a variety of Mortgages in the recent times. Once you satisfy the financial stipulations of the lender you are on your way to owning your dream home!
So what is a mortgage in particular in India? We are planning to bring you a series of blog articles on this and many other mortgage related concepts in the coming months. This is an endeavor to inform and educate our customers about Real estate. Please read on!
What is a mortgage?
Mortgage is literally defined as:
Section 58 (a) of the TRANSFER OF PROPERTY ACT, 1882, defines mortgage as, “A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. “
So in simple terms it means, Mortgage or a Home loan is generally taken either to buy flat/house, construction of house or renovation.
In order, to be able to avail the best home loans in India, you need to understand the different terms associated with home loans and then prepare accordingly to get the best home loan in India.
Different Terms Associated With Mortgage Loans (Home Loans):
- A principal is an amount that you borrow from the lenders as a home loan. In India, lenders are allowed to offer up to 90 percent of the property value as home loans. However, lenders do not offer all 90 percent of the property value as a house loan to everyone. It is determined on the basis of your financial standing, your credit history, income, and other such details.
- The down payment is the amount you contribute along with the house loan to buy the house. Depending on the housing loan amount offered to you, it can be between 10 to 40 percent of the total property value.
- An EMI or Equated Monthly Instalment is the amount that you need to pay every month to the home loan lender as a part of the process of mortgage loan/ home loan repayment. It consists of the principal and interest components.
- House loan tenure is the duration for which the loan is sanctioned. It can be between 5 to 30 years. Most people with a low income, opt for longer tenures as it involves lower EMI repayments and is thus, more affordable.
- A home loan interest rate is the interest charged by the lenders on the housing loan. It is higher if the house loan tenure is longer and lower for a short tenure. Lenders determine the home loan interest rate as per the prime lending rates. Interest rates can be floating or fixed. The former fluctuates as per the changes in the market interest rates, while the latter usually remains fixed for the duration of the housing loan.
- Lenders levy a home loan processing fee as well as other charges like service fees, prepayment charges, etc. The home loan processing fee is charged to check your home loan eligibility. Most of these fees are non-refundable.
We at RR Housing, guide you at every step of the home buying process right from finding the house that you like to finding the right mortgage that fits your needs. Our expert staff is trained to answer any questions you might have and allay all your concerns. We do all the hard work so you can rest easy and have a memorable experience with us. We have over 25 years of experience in Real Estate and have 1500+ happy families living in RR Housing homes!
References:
https://www.myloancare.in/home-loan-guide-for-first-time-home-buyers-in-india/
https://www.dhfl.com/blog/understanding-mortgage-home-loan-in-india
https://www.iifl.com/blogs/do-you-know-the-6-types-of-mortgages