Home Loan

Important Things You Should Know About a Mortgage Loan in 2022


When money is critical, it may take a lot of effort to obtain. A homeowner’s ability to quickly and inexpensively get the required funds by mortgaging their house is a major benefit in such a situation. The most attractive feature of a mortgage loan against property is that, unlike many other types of loans, you may qualify for one with very low-interest rates without giving up any house ownership in exchange. Everything you need to know about home mortgages is right here.

What is a Mortage Loan?

Mortgage loans are simply loans that are backed by the equity in a person’s home. You might have a title dispute over a loan against property such as your house or commercial property. Mortgages may be acquired from traditional banks as well as non-banking lending companies. The lender will provide the principal sum plus interest. Monthly payments make it easier to repay the debt. Your collateral stays in the lender’s possession while you pay off the loan. Therefore, the lender has a legal claim to the property throughout the term of the loan and may repossess it and sell it at auction if the borrower does not return the debt.

Like any other kind of financial instrument, it’s important to fully grasp the inner workings of a mortgage loan to avoid any unwelcome surprises down the road. Before you sign anything, please review the following important information.

Five Important Things to Know About Mortage Loan in 2022

Variables That Affect Eligibility Requirements

The Equated Monthly Installment (EMI) may be a starting point in determining whether you qualify for a loan. Traditional financial institutions often limit monthly payments to no more than 40–50% of a borrower’s gross income. In this case, we disregard any reimbursements or allowances. Additional debts, such as a loan against property, may further restrict your eligibility. Institutions may be sensitive about the number of people who rely on you financially. An increased reliance ratio indicates.

Loan Type

You are well aware of the options available to you in terms of mortgage loans, including both fixed-rate and adjustable-rate mortgages. A loan against property with a fixed interest rate is one whose interest rate will not change in response to market conditions. This is an interest rate that is one to two and a half percentage points higher than the cost of a variable-rate mortgage. Meanwhile, the interest rates on floating-rate loans fluctuate with the market.

Loan Interest Rates for Various Mortgages

There is the option of a fixed or variable interest rate for your home loan. Let’s see how the two concepts compare and contrast.

  • As the name suggests, a fixed interest rate does not change at all during the loan’s duration. You can lock in a lower interest rate for the duration of a loan if you borrow for a shorter period. If you’re looking for a mortgage loan against property with a longer term, you may need more time to lock in a fixed interest rate.
  • Interest rates that fluctuate with market conditions are called “floating.” The interest rate cannot be predicted, but you can get a ballpark estimate on the lender’s website. This rate is adjusted regularly by shifts in the Marginal Cost of Funds based Lending Rate (MCLR).

Negotiate the Rate

No matter what you decide to do, remember that you can negotiate the interest rate. The bank would have the upper hand in any negotiation, but you have some leverage as well, especially if you’ve been a customer for a long time. Your credit report shows a perfect record of on-time payments, right? Put it to use in bargaining for better terms and a larger loan. You’ll have more leverage with lenders when your credit score is good.

Longer Tenure Leads to Costlier Loans

The RBI has always maintained a hawkish monetary policy, which has resulted in longer lending periods and higher borrowing prices. Banks have also raised their adjustable mortgage rates in reaction to the hike in base rates. This will result in a higher monthly payment for the borrower. Most borrowers who get this notice of increase then request that the term of their loan against property be adjusted (extended) so that they may make smaller monthly payments.

Switching Lenders

Even though you have a loan with a bank now, it doesn’t mean you have to keep it there forever. If the necessity arises or you get a significantly better offer from another lender, you can switch lenders at any time. Most financial institutions no longer apply prepayment penalties on loans with adjustable rates. Therefore, the processing fee is the sole additional cost.

Features of a Mortgage Loan

Let’s look at the fundamentals of a mortgage loan against property now that we know what it is and how much interest it costs.

  • There is a wide variety of property types, including real estate, that lenders will not accept.
  • Lenders will often approve fully constructed assets, such as residences and stores.
  • Freehold means the owner has the full legal right to transfer ownership, and marketable value means the property may be sold.
  • Mortgage loans are considered secured loans because the lender gives you the loan amount in exchange for the use of your property as security.
  • It’s possible to get a mortgage loan with a repayment period of up to 30 years, with payments spread out into more manageable EMIs.
  • A mortgage loan against property may be tailored to your specific requirements.

Benefits of a Mortgage Loan

  • One way to use a home equity loan is to pay for a necessary medical procedure.
  • Company expansion and financing kids’ college tuition; funding a kid’s wedding expenses
  • Mortgage perks for renovating your property Now that we’ve covered what a mortgage loan is and how it works, let’s look at some of the benefits.
  • Legally, you will remain the property owner even if you use the loan money to pay for anything you need.
  • Mortgage loans are popular because lenders feel safer with them than with other types of unsecured loans.
  • Home loans often have far more reasonable interest rates than individual loans.
  • The conditions of repayment are negotiable.


The process of obtaining a mortgage loan against property is more straightforward in theory than in practice. The time it takes to get a loan authorized might be substantial, even if it seems like all banks are eager to offer. A reputed institution like Pirimal Finance will be able to assist you if you want to learn more about a mortgage loan and how it works. Do not hesitate to visit them.