A Mortgage Loan is primarily a type of credit which can be procured by pledging collateral. In a vast majority of cases, Mortgage Loans are acquired as a means to pay off the price of land or property. When the purchase of real estate is involved, the lender only offers 85% to 90% of the purchase price, while the remaining 10% to 15% is supposed to be paid by the borrower. The latter part of the payment is known as the down payment, which essentially proves the borrower’s ability to repay the loan, while also helping in bringing down the loan amount.
The amount offered as a Mortgage Loan is usually equal to or less than the market value of the asset offered as collateral. The amount is lent to the borrower for a stipulated period, generally ranging from 10 to 30 years. You must repay the loan in the form of equated monthly instalments or equated monthly instalments (EMIs) which comprise the principal amount as well as the interest component. More often than not, Mortgage Loans attract an interest rate in the range of 8.50% to 11.50%. The percentage of interest usually depends on the individual policy of the lender, as well as the repayment history of the borrower. The better the repayment history, the lower is the interest rate levied on the loan amount.
Mortgage Loans are basically Home Loans and Loans Against Property, wherein the lender uses the property as collateral to lend funds to the borrowers. These loans have the following features:
The buyer needs to pledge an asset (a property, or shares, or bonds, or equity or gold), in lieu of the loan amount.
In case of defaults in the loan repayment, the lender reserves the right to seize the asset and sell it off as a measure to recoup the losses.
Mortgages Loans attract a lower rate of interest, due to the reduced risk propensity of the buyer.
As you may have come to understand by now, Mortgage Loans can prove to be of great help for those looking forward to make big-ticket purchases. In case, such a loan is availed in order to buy an old, new, or an under-construction house, the house itself is offered as collateral to the bank.
While the collateral largely decreases the risk proposition of the lender, since it can always sell off the property in case of defaults or none-payment of EMIs, a vast majority of lenders still prefer to offer such loans to salaried individuals. The reason behind this is rather simple. People working for reputed organisations enjoy higher job stability. Besides, such people are more likely to get promoted steadily, thus experiencing an increase in income with time.
On the other hand, lenders usually shy away from handing out loans to self-employed business owners or professionals, due to the seemingly high instability – both, in the source of employment as well as the average income.
Thankfully, things are now changing, and how! Today, all the leading banks as well as financial service providers across the nation are working toward offering competitive Mortgage Loans for self-employed individuals. This change can be attributed to the growing inclination of the youth to kick-start its own entrepreneurial venture. The increased percentage of independent people, clearly implies that the banks need to cater to their needs, if they wish to continue their run successfully in the modern way world ruled by dynamism.
Of course, the rate of interest for Mortgage Loans offered to self-employed people is slightly higher than that provided to their salaried counterparts. However, if you tread carefully, and ensure that the below-mentioned aspects are in line with the lender’s requirements, you can rest assured of getting a swift approval on your Mortgage Loan application. Let us take a quick look at each of the aspects:
Also known as the ITR copy, this document primarily acts as the proof of income. Most lenders require the ITR of the past 2 years, while some may require the same for as many as last 3 years. Needless to say, the more your income, the higher will be the loan amount that you will qualify for and the higher will be your chances of getting an approval.
This further acts as a proof of the stability as well as the profitability of your business venture. Your lender may ask you for the P&L statement for one or even two years, to understand how well your business is performing, and if you will be capable of repaying the loan n the coming years. If everything looks fine, the lender will likely approve your loan application at the earliest possible.
Most lenders have pre-defined eligibility criteria for offering Mortgage Loans. If you have already picked a lender that best suits your needs, you must look into the eligibility criteria set by them, and analyse whether or not you fit into the same. If not, you should either try to meet the said criteria, or look for a lender which would be apt for your situation.
For most lenders, safeguarding their own interest is as important, as ensuring that you have the requisite amount of money as and when you need it. It is for this reason that they look into your credit score before approving your loan application. Not only does a high score guarantee them of your willingness to repay the loan efficiently, but also ensure that you get the loan at a competitive interest rate.
If you are planning to Apply for Mortgage Loans, here is the list of documents that you would need to furnish for the request to get processed at the earliest possible:
It is our sincere hope that you now have the complete know-how regarding Mortgage Loans for self-employed individuals. And now that you do, wait no more before you apply for this astoundingly significant credit type.
To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 70+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.