What is Mortgage loan in Banking in India?
Mortgage loan banking in India has emerged as one of the most crucial sectors in the country’s financial industry. With the rising demand for affordable housing and the government’s emphasis on housing for all, the mortgage loan market has witnessed significant growth in recent years. In this article, we will discuss what mortgage loan banking in India is and how it works.
What is Mortgage Loan Banking?
Mortgage loan banking is a type of banking service that provides loans to individuals or companies for purchasing a property. In India, mortgage loan banking is a significant segment of the banking industry, which helps people buy their dream homes or commercial properties. Mortgage loan banks offer loans against the property, which means the borrower needs to provide collateral to secure the loan.
How Does Mortgage Loan Banking Work in India?
Mortgage loan banking in India works in a straightforward way. The borrower applies for a mortgage loan by filling out the application form and providing necessary documents such as income proof, property documents, identity proof, etc. After verifying the documents, the bank conducts a property valuation to assess the property’s value.
Based on the property’s value, the bank decides on the loan amount and interest rate. The borrower needs to repay the loan in equated monthly installments (EMIs) over a specified period, typically ranging from 10 to 30 years.
Mortgage loans in India have two types of interest rates: fixed and floating. In a fixed interest rate mortgage loan, the interest rate remains constant throughout the loan tenure. In contrast, in a floating interest rate mortgage loan, the interest rate fluctuates based on market conditions.
Benefits of Mortgage Loan Banking in India
Mortgage loan banking in India provides several benefits to borrowers, including:
- Easy accessibility: Mortgage loan banks are easily accessible, and the loan application process is relatively straightforward.
- Long-term repayment tenure: Mortgage loans in India have a long-term repayment tenure of up to 30 years, making them an affordable option for borrowers.
- Tax benefits: Borrowers can avail of tax benefits on mortgage loan repayments under Section 80C and Section 24 of the Income Tax Act.
- Low-interest rates: Mortgage loan interest rates in India are relatively low compared to other forms of credit, making them an affordable option for borrowers.
Related Articles
Conclusion
Mortgage loan banking in India has played a significant role in enabling people to buy their dream homes. With the government’s emphasis on affordable housing, the mortgage loan market is expected to grow further in the coming years. As a borrower, it is essential to understand the mortgage loan banking process, the interest rates, and the benefits to make an informed decision while availing of a mortgage loan.