Eligibility and Documentation Process of Mortgage for Loan

 From planned personal expenses to sudden professional demands, various financial needs can pop up at any time in life. There are various banks or NBFC’s who provide financial assistance to their customers by offering different types of loans. One such product is ‘Mortgage for Loan’. As the name itself defines, ‘Mortgage for Loan’ means a secured loan. Though banks are always on a roll to gain prospective customers, getting a ‘Mortgage for Loan’ can be tricky. Therefore, before running your pen over the agreement, you should go through important points. This can start from understanding what is a ‘Mortgage loan’.

Understand What is a Mortgage Loan?

Legally mortgage loan simply means pledging any immovable property or asset (residential or commercial) as collateral to the bank to avail of a loan.

Eligibility to Take a Mortgage for Loan

Mortgage for a loan is the most preferred product by borrowers who are looking for a huge amount of money, by simply providing property as collateral. Investing in building a strong applicant profile empowers you to access more favorable mortgage options and borrow a larger amount. The most common way of acquiring a mortgage loan is by mortgaging a piece of property. This can be both residential such as a house, or a residential land parcel or over commercial assets like mortgaging commercial spaces or commercial land parcels.

Apart from the estimated value of your collaterals, your financial strength may also play a strong role in building up your profile and eligibility, based on which the bank may agree to sanction a certain amount.

The bank may further evaluate your application by figuring out the stability of your income source, the number of earning members in your family, and the number of dependents on you.

People with stable jobs find it relatively easier to get a loan than say a self-employed individual with an erratic income.

Apart from your income, banks may also consider your retirement age as criteria to evaluate sustainable income based on which they will evaluate your repayment capacity and the tenure of the loan. In such a scenario having a younger co-applicant will increase your chances of acquiring high loan approval; the bank will club co-applicant’s income with the prime borrower, on which the bank may sanction a high amount with a capping of around 70 – 80% of the property value.

Registered or Non-Registered Mortgage Loan

There are two ways to avail mortgage loan one is a registered other is non registered mortgage loan.

To solidify a registered mortgage loan, the lender registers the agreement deed with the local registrar. This gives the lender full authority over the mortgaged property. It depends on bank to bank what their preferences are. Usually, most banks prefer registered mortgages, especially in India. It gives them more security and power in case of non-payment of the dues. Bank or NBFC can seize or auction the property directly without court intervention, to recover the due loan amount.

In a non- registered mortgage loan, there is no involvement of a registrar. To proceed with the mortgage, the borrower needs to hand over all valid property documents directly to the bank. Further approval or disbursement process is then done by reviewing the documents and by evaluating the value of the property.

Documentation Process of Mortgage for Loan

The process to avail a mortgage for a loan depends upon the kind of property to be mortgaged— for a domestic or residential property the process is simple. The borrower will have to provide complete details like identity proof, income proof, and more while submitting the loan application. The lender’s approval process involves submitting documents that prove your ownership of the property for the mortgage. Once the documents are submitted, banks undertake a valuation of the property to be mortgaged and disburse the amount accordingly.