Mortgage loans are synonymous with loans against property or property loans in India. These are loans availed of against a residential or commercial property. If you are a property owner, you can pledge the property you own as security and take a loan against it. The highest LTV ratio that you can opt for in the case of mortgage loans is 75%. In other words, if you meet your lender’s mortgage loan eligibility requirements and have a clean repayment track record along with a good CIBIL score, you can avail of 75% of the pledged property’s current market value as a loan. Mortgage loans offer many benefits. Let us look at these benefits.
Mortgage Loans or Property Loan Benefits
1. Mortgage loans are backed by security. Mortgage loan interest rates tend to be quite low. With the right credit profile, a loan applicant can avail of a mortgage loan at an interest rate as low as 8.50% per annum.
2. Mortgage loans or property loans are one of the few loan options that give borrowers access to hefty funds. Since the LTV ratio in the case of these loans can go as high as 75%, loans against property are one of the only loan options that allow borrowers access to credit high enough to take care of all of their personal and professional needs.
3. Property loans come with a long repayment tenor. Borrowers can decide to repay their loan over a period extending up to 20 years. This flexibility to choose a long repayment tenor helps borrowers keep EMIs affordable and loan repayment stress-free, especially in the case of high LTV ratio property loans.
4. Lenders place zero end-use restrictions on the usage of funds availed of under loans against property. Thus, borrowers can use the money availed of to take care of personal as well as professional needs.
5. Individuals also get the option of a mortgage loan balance transfer. If you are unsatisfied with your current lender’s service or loan terms and conditions, you can transfer the remaining balance on your home loan to another lender. The option of refinancing one’s home loan proves especially beneficial if opted for at the right time.
Given these benefits, it is not surprising that the demand for loans against property has been at an all-time high. Here are some tips on what you can do to improve your mortgage loan eligibility as well as your chances of loan approval
Simple Tips on How to Improve Your Mortgage Loan Eligibility
1. Maintain a credit score above 750. A high credit score indicates high repayment capacity and creditworthiness. Borrowers with a high credit score not only get approved for a loan quickly but are also able to demand better terms and conditions on their loans.
2. Pledge a high-quality collateral. Since loans against property are backed by collateral, the quality of the collateral matters a lot. Properties located in upscale areas or modern-gated communities have high resale value and enhance an individual’s mortgage loan eligibility. On the contrary, low-value properties lead to low mortgage loan eligibility.
3. Your debt-to-income ratio affects your ability to repay your loan without defaulting. A high debt-to-income ratio increases the chances of loan default. Therefore, to increase your mortgage loan eligibility, keep your debt-to-income ratio low. If you already have too many loans and a considerable portion of your loan income is already going towards loan repayment, consider paying off a few loans to bring down your debt-to-income ratio.
4. Opting for a low LTV ratio loan will also work in your favour and enhance your loan eligibility. Low LTV ratio loans involve lower loan amounts and therefore, are easy to repay. Chances of loan default are low in the case of these loans. Therefore, low LTV ratio loans are sanctioned easily and attract better loan terms and conditions.
5. Though mortgage loans are backed by collateral, it is important that you maintain age and income stability. Maintaining a stable income and job convinces your best licensed money lender Singapore of your ability to repay a loan on time without defaulting and therefore, leads to high mortgage loan eligibility.
Concluding Remarks
Mortgage loans are an excellent way of raising funds, especially when you need access to a hefty amount. However, do keep in mind that these loans require you to pledge a property you own as collateral. So, it is recommended that you avail of these loans after due deliberation and planning. Further, maintain high eligibility to avail yourself of the lowest property loan interest rates so that you can repay your loan in a stress-free manner.
