Factors Which Help To Qualify For A Mortgage Loan

June 2019 recorded outstanding advances by financial institutions at Rs. 22.5 Lakh Crore, out of which Rs. 11.8 Lakh Crore were only mortgage loan products. With more than half of the capital involved in credit financing across India being involved in secured loans, this statistical data shows the popularity of this financial product.

Initiatives from the Government of India like PMAY have even furthered this cause with more citizens opting to capitalize on the financial value of their property assets to meet varied requirements.

Data On The Rising Demand For Mortgage Loans

• From 9.5% growth in the financial year 2017, growth to 16% was recorded in the financial year 2018.
• A further growth by 17%-19% over the next financial year is estimated with ease in eligibility and factors affecting mortgage loans.
• According to market research, CIBIL scores above 750 have had a 79% approval rate.
• 3 consecutive Reserve Bank of India monetary policies have lead to 75 bps (basis point) cut on the repo rate of retail loans.

Along with an increase in the number of customers opting for mortgage loans, potential applicants are often coming up with a common query “is mortgage loan interest tax-deductible in India”? Vitally, with schemes like PMAY and income tax reforms, many tax exemptions, as well as subsidized interest rates, are up for grabs.

Lowered rates of interest and convenience in tax deductions allow borrowers to opt for higher loan amounts. Furthermore, considering there are numerous tax slabs and deduction rates depending on income customers should carefully look into how they can avail tax benefits on their LAP.

Apart from knowing how to avail tax exemptions, borrowers also need to know the factors which can determine the loan terms they can avail.

Factors Which Determine Eligibility For A Mortgage Loan

• Credit Score of the Applicant: After an applicant completes his or her application process, financial institutions consider their creditworthiness first via the credit or CIBIL score. This score is determined by the credit history of an applicant. Ranging between 300 and 900, generally, a score of 750 and above is considered good. Potential customers should be cautious to clear their debts and credit lines on time since this directly influences the CIBIL score.

Existing debts are not an issue for future credit lines. However, unpaid loans and credit statements can immensely damage the chances of loan approval.

Mortgage loan schemes can be conversely used to fight depreciation of CIBIL scores due to unpaid debts. Customers with detailed information on how to get out of a debt trap using loan against property can avail this scheme timely and clear past credit lines.

• Work History: Individuals employed with government or reputed private organizations usually have better chances of loan approval since they have a stable source of income.
• Debt-to-Income Ratio: Once the loan against the property process is completed as well as documentation, lenders look into the debt-to-income ratio of the applicant. This is the ratio of income generated by an individual to his or her overall debt repayment expense.
• Age of Applicant: Age is a crucial factor since younger applicants have a better chance of repayment with more number of years ahead of them. It thus influences the rate of interest offered to an applicant.
• Property Details: While there are many things applicants need to know before applying for a loan against property scheme, a crucial factor is the property itself. Lenders consider details like the age of a property, location, assets, etc. and then estimate its value. This factor affects the loan amount as well as the rate of interest.

While the above factors are considered by lenders, they also offer convenient eligibility criteria as well as easy loans against the property process for a hassle-free customer experience. Financial institutions even bring you pre-approved offers that make availing loans against property quick and easy.

Pre-approved offers are available on numerous financial products including loans against property, home loans, personal loans, business loans, etc. You can check out your pre-approved offer by providing your name and phone number.

Potential customers with questions like “is mortgage loan interest tax-deductible in India” can be happy with the knowledge of tax deductions depending on their personal incomes and loan availed. Additionally, spouses can even go for joint properties to avail of tax benefits individually. Note that joint loan against property applications will require joint ownership of the property as well.

Subsequently, knowing the vital factors which affect the approval of mortgage loans also ensure customers can plan ahead and qualify for all the requirements. As a result, financial institutions provide simple loans against the property process to ensure customer convenience.