Comprehensive Guide on How to Avail Mortgage Loan at Lowest Interest Rates

The competitive mortgage loan interest rates and long repayment tenor of a LAP have made it a popular credit option for those looking for funds during a financial emergency. 

Since the levied mortgage loan interest rates determines the affordability of the monthly payables, one must conduct thorough market research to avail of the best deal. Here, we are going to learn everything about mortgage loan interest. 

What are the Types of Interest Rates Applies on Mortgage Loans? 

Based on the financial strength and repayment capability, one can choose either of the following interest rates while opting for a loan against property:

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Fixed interest rate 

In case a borrower opts for this type, rate of interest remains unchanged throughout the repayment tenor. 

Floating interest rate

While opting for this type, one should keep in mind that rate of interest can change with the fluctuations in market. 

Hence, one should keep this in mind and make an informed decision accordingly. 

What are the factors that affect mortgage loan interest rates? 

The 4 factors that affect the interest rate for a mortgage loan are: 

Location and type of property 

Financial institutions offer different rates of interest for residential and commercial properties. Furthermore, the location, resale value, amenities, etc., also affect the rate of interest. 

Generally, a property situated in a prime location with all modern amenities and decent transportation will have a high resale value. When an individual pledge such a property, he/she will be offered a lower interest rate. 

Loan quantum 

An applicant opting for a high loan amount will be offered high interest rates. This is because the risk of defaulting increases for such loan applications. Hence, customers must assess their financial requirements and borrow the actual amount required. 

Loan repayment tenor

The mortgage loan repayment tenor also plays a vital role in deciding the interest rate. Financial institutions offer mortgage loans for long repayment tenors. However, those opting for a long repayment tenor are offered higher interest rates. This is because lending institutions consider such applicants as risky borrowers. 

Credit score of an applicant 

An applicant’s credit score affects the loan against property eligibility. A financial institution will check the credit score of an applicant to assess his/her creditworthiness and repayment behaviour. Ideally, a credit score of 750 and above is considered to be a decent score. As a result, such applicants have higher chances of availing of the best deals while opting for a loan against property. 

How to Use Mortgage Loan Interest Rate Calculator 

Willing mortgage loan applicants can also consider using a mortgage loan interest rate calculator to determine their EMI payouts even before applying for a credit. This online customised tool works on the following mathematical formula: 

EMI= [P x R x (1+R) ^N]/ [(1+R) ^N-1]

Here, P is the principal loan amount, R is the rate of interest charged by the lender, and N is the total repayment tenor in months. 

One can use a loan against property EMI calculator by following these simple steps:

Step 1: Visit the official website of your preferred lending institution and locate the ‘Loan against property EMI calculator’ option. 

Step 2: In the tool, enter the principal, rate of interest and the total repayment tenor in months and click on ‘Calculate’. 

Based on the variables provided by the user, the mortgage loan EMI calculator will show the monthly instalments for the principal amount, along with the total interest outgo at the end of the repayment tenor. 

Further, while determining the total borrowing cost, applicants must also consider the fees and charges associated with a LAP to get the exact amount they are liable to pay. 

To sum it up, a best loan against property can be an ideal choice in cases of financial crisis, considering the flexible mortgage loan interest rates, long repayment tenor, etc. However, customers should make sure to make timely repayments and keep their mortgaged properties safe throughout the repayment tenor. 

Several financial institutions in our country extend pre-approved offers on secured credit facilities, such as loans against property, home loans, etc. These offers expedite the overall loan application procedure and help in the fast disbursal of the loan amount. Eligible customers can check their pre-approved offers by entering their names and contact details in the required section of the lender’s portal.