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A mortgage loan is a secured loan where real estate or property is pledged as collateral. It is typically used by individuals or businesses to finance the purchase of residential or commercial properties.
Since mortgage loans involve a substantial financial commitment, it’s important to carefully evaluate and compare lenders based on interest rates, associated fees, and repayment terms to choose the most suitable option.
In case of default, the lender has the legal authority to repossess and sell the financed property to recover the unpaid loan amount.
The amount sanctioned under a mortgage loan is based on the market value of the property being purchased. Typically, lenders finance between 75% to 90% of the property’s value, depending on the borrower’s profile and lender norms.
Mortgage loans may come with either fixed or floating interest rates. Fixed rates remain unchanged throughout the loan term, while floating rates vary in line with prevailing market conditions.
These loans usually offer extended repayment periods, ranging from 15 to 30 years. The exact tenure is influenced by factors such as the applicant’s income, age, and the lending institution’s policies.
In India, borrowers can claim tax deductions on both the interest paid and the principal repaid on mortgage loans under the Income Tax Act, subject to specified conditions and limits. These benefits help in lowering the borrower’s overall tax burden.
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