There comes a time when a person gets surrounded by liabilities and seeks help. There are enough opportunities for them to deal with the situation. They can avail loans from lenders for their definite purpose. But, the big question is that whether the loans are really going to pull out of financial crisis or create a much deeper one. Nowadays, the interest rates charged on loans especially on personal loans are way too high and un-affordable for many. Then, what one can do beside this? How about getting a Mortgage loan or Loans against Property?
This article will answer every question on mortgage loans.
- What is Mortgage loan or Loans against Property?
This is one type of several kinds of loans present. It is a form of secured loans in which the mortgage is tied against the property of borrower. It can be a residential property (self-occupied or rented), commercial property or land. This type of loan gives the same benefits as personal loans like the amount can be used multi-purposely i.e. for education, medical expenses or buying a new entity.
Difference between Mortgage loans and Personal loans
- Time to process
As we know that mortgage loans are secured form of loans and any of these loans take several days or a month before the amount is disbursed. First of all the borrower has to present the legal documents regarding the ownership of the property against which the loan is taken. Also, banks judge repayment capacity of borrower through income and further look credit history before they sanction loan.
On the other hand, personal loans are the unsecured form of loans hence, banks only look to some documents of income, cibil score and the loan would be sanctioned. It will take 2, 3 days hardly to disburse the money. In some cases it can even be given within 24 hours.
The rates usually depend upon the credit score of the borrower. Many with good credit score get loans on cheaper rates.
Mortgage loans charge less interest rate as they are secured loans. The rates can be anywhere from 11% to 16%.
However personal loans are going to be very expensive. The rates can be anywhere from 16% to 21%.
Mortgage loans depend on two factors which are the market value of property and income. Basically, 40% to 70% of the current value of property can be sanctioned. It may go up to several crores but, income of borrower plays a crucial part.
Personal loans offer money only based on monthly income. As the lenders are at risk in personal loans, the amount could only rise up to 25 lakhs maximum. It may vary from lenders to lenders.
EMI and Time Tenure
Mortgage loans are offered for maximum to 15 year whereas personal loans are given for less time. Also, mortgage loans have lower interest rates resulting in less Equated Monthly Installments as compared to personal loans which have higher EMI. However, the flip side is that longer tenure would also result in higher interest payout.
Although, Mortgage loans come out to be better in comparison with personal loans, there are lots of requirements too. Those who need emergency funds could get personal loans from different banks with good offers like Axis bank personal loans, HDFC bank loans or SBI. All the listed banks also provide Mortgage loans, so there is no need to worry.