A mortgage is a type of secured loan as it is secured against the collateral provided. The collateral means pledging of property to obtain the loan. Such a property can either be residential or commercial. The mortgage loan is termed as Loan Against Property (LAP).
Let’s highlight some important aspects of the property in mortgage loan.
1) The Property can be either residential or commercial.
2) The property should be an ownership property. It can be a self or jointly owned a parental owned property. Third party ownership property cannot be a mortgage.
3) The age of the property is important to ensure the maximum loan tenure. For the properties which are more than 50years of old, a structural audit report is mandatory while applying for a mortgage loan.
4) The market value of the property is important to ascertain the current market value of the property, depending on which bank decides the funding for mortgage loan.
5) There are properties that cannot be considered for a mortgage because of reasons like falling in negative areas of the bank, chawl property, pagadi property, etc.
6) OC , CC & Plan Copy along with index 2 are the mandatory property documents along with the prior chain of agreement. OC is the occupancy certificate which is mandatory in property more than 10years old. While CC- completion certificate along with blue print i.e. master plan copy is mandatory for the properties which are less than 10 years old.
7) Properties which are more than 25-30years of old, property tax is mandatory for mortgage in the event of absence of OC & CC + plan copy.
8) In the event of lost/missing chain of agreement, a prior FIR with public notice is mandatory along with the no claim letter if the property is to be mortgaged.
9) The property title should be clear. The title should not reflect any law suit when mortgaging the property.
To scrutinize the above points means carrying out the legal and technical of the property, which is the most important process in the mortgage loans. The bank charges the borrower for such scrutiny under the head legal and technical changes. The Charges differ from banks to banks/NBFCs.
The eligibility for the loan is determined as the lowest of the two – i.e. the income eligibility of the borrower subject to the LTV (loan to value) factor of the property.
The rate of interest, processing fees, closure conditions, etc differs from bank to banks.
Know a day mortgage is also provided as an OD-overdraft facility, such bank product is named as LAP-OD which was basically introduced for self-employed mortgage borrower to meet their working capital requirement in the business, but recently the product is extended to the salaried working class as well by few of the lender bank/NBFCs. The rate of interest with LAP-OD defiantly differs from the regular mortgage interest rates. It is 1-2% higher in comparison to the mortgage rate of interest.
In addition to provide the benefits of the mortgage facility to the senior citizens and the retired people above the age of 60 years, the Union Government of India has introduced the concept of Reverse Mortgage. It is a concept where the borrower does not have to repay the loan borrowed during his life, lifetime or till such time he continues to stay in the house. The entire loan balance along with the interest + mortgage insurance availed if any becomes payable only when the borrower sells the house or moves away permanently or when the last surviving borrower dies. Such extended benefits of a reverse mortgage are made available to the elderly by few banks & NBFCs, provider banks are majorly the nationalized banks.