All You Need To Know About Mortgage Loan

Financial obligations can come up at any point in time in life. These unforeseen circumstances can put a serious dent in our financial condition. However, you can always use some of your assets to get rid of this financial crisis. You can put your asset as collateral against a loan and use that amount to mitigate the current financial crisis. Financial institutions provide mortgage loans at attractive rates in interest. You can use an online mortgage loan calculator to assess the amount of monthly EMI you will have to pay. In this article, we will discuss all you need to know about a mortgage loan.

What is a mortgage loan?

A mortgage loan is also known as a loan against property. It is a specific type of secured loan where you can put your property as collateral. The property can be any real estate that you own. Secured loans are loans that are backed up by collateral. Hence, the financial institutions are not at risk of losing money by giving a secured loan. Due to the low risk associated with these loans, the rate of interest is lower than a personal loan.

There are certain conditions related to the property that have to be fulfilled to get the loan approved.

  • The house should be fully constructed (in case of residential or commercial property)
  • The property should be freehold property. A freehold property gives full legal rights to the owners to live and use the property.
  • The property should have a market value.

Important Things to Know About a Mortgage Loan

Who can avail?

Mortgage loans or loans against property can be availed by individuals, salaried employees, self-employed, proprietary firms, partnership firms, professionals, and businessmen. The application for this loan can be filled by individuals and by co-applicants. Owners of the current property need to be co-applicants. However, the reverse is not required.

  • Rate of Interest

Being a secured loan, the rate of interest for a mortgage loan is much less. Different financial institutions charge different interest rates based on various parameters. You can check the various rates on interest and the corresponding EMIs using an online mortgage loan calculator.

  • Amount of Loan

The amount of the loan will be in direct proportion to the market value of the property kept as collateral. Generally, the loan amount is about 50% of the market value of the property. However, it can go much higher than that too in some cases. A minimum of INR 1 Lakh is required to be applied for.

  • Documentation

Mortgage loans do require a bit of documentation before the loan can be approved. Documents related to the borrower as well as the property to be put as collateral are required by the financial institution.

Some of the important documents required include the annual income statement of the last 3 years of the borrower, income tax returns of the last three years, and papers related to the property (original sale deed, encumbrance certificate, property tax receipt).

  • Tenure and repayment

The tenure for repayment is longer as compared to a personal loan as this is a secured loan. Financial institutions also provide an extension of tenure if applicable. The maximum tenure for repayment is usually seven years. You should also check if there is a provision of foreclosure without incurring any extra charges.

There are different modes of repayment available. The most common mode of repayment is through EMIs. You can select the date of payment every month. EMIs are small and easy to pay.

  • Case of Default

In case of a default by the borrower, the lender can take charge of the property to recover the outstanding amount. The property can then be sold, by due permission from the court, in the open market to recover the due amount.


You can put an idle piece of land to work for you and get some capital against it. You can then use it to mitigate a short-term financial crisis or to achieve your next financial goal.