Living under one’s own roof is a dream come true for many Indians. For the bulk of Indian home buyers, getting a home loan is the final step towards buying a house.
If you’re contemplating homeownership and wondering how to get started, you’re in the right place. We’ll help you understand all the mortgage basics – from what is a mortgage loan to its workings and documentation requirements.
What does mortgage mean?
Before we dive in, let’s get some basic terminologies out of the way. First, what does ‘mortgage’ mean?
Simply put, a mortgage is a loan you can use to refinance or purchase a house. It’s also sometimes referred to as ‘mortgage loan.’ If you don’t have a substantial cash reserve for an upfront payment, a mortgage can help you fund your dream home.
How does mortgage finance work?
To understand how a mortgage works, you must know what collateral means. Collateral is any asset that you promise to a lender. Essentially, it offers lenders security in case a borrower defaults on their loan. Under such circumstances, lenders can liquidate the collateral to get their money back.
With a mortgage, you promise your home as collateral to the lender. The lender will hold your property until full repayment. Loan repayment is made through equated monthly instalments, or EMIs, the size of which depends on the loan amount, interest rate, and tenure. Mortgage tenures can go as high as 30 years.
Besides, you can repay the loan before the term is up. However, before you do so, check if the lender levies any pre-payment charges.
Additional Read: Things to Keep in Mind if You Are Buying a Resale/Old Property
Documents required to avail of mortgage
Although the documentation requirements can vary from lender to lender, here’s a list of documents required by Tata Capital:
- Loan application form
- Passport-size photographs
- Identity proof: Driving license, Aadhar card, PAN card, Voter’s ID, or passport
- Age proof: Aadhar card, PAN card, birth certificate, passport, driving license, 10th class mark sheet, or bank passbook
- Residence Proof: Ration card, utility bills, LIC policy report, or passport
- Income proof for salaried employees: Form 16, IT returns of past three years, payslip of last two months, certified letter from employer, and increment or promotion letter
- Income proof for self-employed: ITR of last three years, balance sheet, proof of business address, business license details, profit and loss account statement
- Property documents: NOC from society/builder, property tax receipts, registered sale deed, occupancy certificate, building plan, and cost of construction of the house
- Details about any existing loans
- Processing fee cheque
Additional Read: Check Your Eligibility and Documents Required for Home Loan
Over to you
Now that you know how mortgage loan works, you are ready to embark on a home buying quest. Let Tata Capital accompany you on this journey with our affordable home loans. Enjoy attractive interest rates, extended loan tenures, flexible repayment options, instant approvals, and swift disbursals.
So why wait? Check your home loan eligibility by visiting our website today!