Exemplar

Types of interest rates on mortgage loans

You can pay off your mortgage loan, either by opting for a fixed interest rate or a floating interest rate. Let’s understand the meaning of the two.

Fixed interest rate: As the name suggests, a fixed interest rate remains the same for the entire loan tenure. You may be allowed to opt for a fixed interest rate if you opt for shorter tenures. In case you are looking for a longer tenure mortgage loan, you may not be able to avail a fixed interest rate.

Floating interest rate: The interest rates are adjusted according to the prevailing market rates. You cannot predict the rate of interest but can get an idea of the current interest rate on the lender’s website. This is a rate of interest than can change periodically and it is directly linked to the Marginal Cost of Funds based Lending Rate or MCLR.

Benefits of mortgage loan

You continue to remain the legal owner of your property while you use the funds from the loan to fulfil your needs.
Mortgage loans are easily approved since they are secured loans
The interest you pay on a mortgage loan is much lower than that of a personal loan
You get flexible repayment tenures
There is no restriction on how you use the money

Types of Mortgage

Different types of mortgages are available to prospective borrowers. Before you accept one, it is best to know your options and ensure that you are making the best choice. Here are the types of mortgages you should know about.

Simple Mortgage

A simple mortgage is an agreement that if the borrower is unable to repay the loan in full, the lender can sell the property that was offered as collateral and recover their amount. However, the property is not transferred to the lender.

Usufructuary Mortgage

In this case, the property is transferred to the lender, who can then earn profits from the same. Usufructuary mortgage usually does not offer full ownership but rather a temporary right.

English Mortgage

The collateral can come under the possession of the lender if the borrower fails to make full repayment of the loan during the tenure originally agreed upon.

Sub Mortgage

If a prospective borrower has a less than ideal credit history or a low credit score and the lender would like to offer a loan, they tend to do so at higher interest rates. It is done to ensure recovery of their money in case the borrower failed to make payments. These are termed as sub mortgage loans.

Documents required for a Mortgage Loan

Salaried Individuals	Self-Employed individuals
A duly filled up loan application form.	A duly filled up loan application form.
Recent passport size photograph.	Recent passport size photograph.
Proof of identity to be submitted, such as voter card, driving license, PAN card, passport, employee ID card, etc.	Identity proof such as voter card, driving license, PAN card, passport, employee ID card, etc.
Address proof such as ration card, Aadhaar card, telephone bill, electricity bill, voter card, and driving license	Proof of business existence.
Your latest pay slips. Form 16 as issued by your employer. Last 6 months Bank statements	Certified financial statement for the last 3 years. Income tax return certificate for last 3 years. Profit and loss (P&L) statement for the last 3 years Bank statement for the last 6 months
A cheque towards processing fee.	A cheque towards processing fee.

YOU CAN ALSO APPROACH PROFESSIONAL EXEMPLAR FINANCIAL PLANNER WHO CAN PROVIDE YOU UNBIASED ADVICE AND ASSIST YOU IN RENTAL, BUYING OR SELLING ANY INDUSTRIAL OR COMMERCIAL PROPERTY.