6 Steps of the Mortgage Loan Process From Pre Approval to Closing

Lack of sufficient funds could become an obstacle in achieving your dreams, such as pursuing higher education from a foreign, remodeling your home, or starting your own business. While there are multiple borrowing options available in the market, opting for a loan against property (LAP) is an efficient and hassle-free way to accumulate funds with convenient repayment options.

A secured form of loan can quickly obtain a mortgage loan by pledging an immovable asset as collateral against the loan amount. With the emergence of various financial institutions, one should compare the mortgage loan interest and check the eligibility conditions before applying for the loan. Packed with additional benefits and sanctioned upon minimum paperwork, a mortgage loan could be an ideal solution to acquire substantial capital for fulfilling your ambitions. Read on to know more about the six steps of the mortgage loan process.

Six Steps of the Mortgage Loan Process:

• Pre-approve your property value

The first step towards obtaining a mortgage loan is evaluating the correct value of your property based on several factors such as its size, age, location, facilities offered, etc. Whether the borrower has decided on the loan amount or not, getting an estimate of the property could be pretty helpful in placing your loan request in front of the lender without any hesitation. A real estate dealer will perform the proper valuation of the residential or commercial property to be pledged as collateral and help you obtain up to 80% of the property’s market value as a loan amount from the lender.

• Confirm your eligibility

The next step for getting a loan against a property is assessing the required eligibility conditions to ensure the approval of your loan application without any hassle. The eligibility criteria for a mortgage loan consist of the following:

• Age – An important aspect considered by the lender to determine the borrower’s loan repayment ability, the age of the candidate should be between 21 and 65 years.
• Nature of work – The candidate should be a salaried professional in the private or public sector or a self-employed person with a stable source of income.
• Credit score – The candidate should have a healthy credit history with a CIBIL score of 700 or more to be eligible for a mortgage loan as it validates the debt-handling capability of the borrower.
• Loan rejection history – While performing the background checks of the borrower, if the lender comes across any previously rejected applications which you have not mentioned in the current loan request, it might indicate low creditworthiness. Hence, be transparent in your loan application about your loan history.

• Compare the interest rates and other charges

In the case of mortgaging the property for a loan, the lenders usually charge a low-interest rate, ranging from 9% to 24% for the secured nature of the loan. While the interest rates for a mortgage loan depend upon various parameters such as the candidate’s net income, existing monthly obligations, LAP product type, employment or business stability, etc., the interest rate differs from one lender to another. Hence, one should compare the varying interest rates offered by different financial institutions to get the best offer, which would significantly reduce your overall loan amount. One should also check and add other loan expenses such as the processing fee, foreclosure charges, service tax, and statutory charge, along with the stamp duty cost to get the total loan amount.

• Compute your EMI amount

Another critical factor to focus upon while obtaining a mortgage loan is calculating the amount for equated monthly installments (EMI) before submitting your application. One can quickly compute the EMI amount by entering the loan tenure, loan amount, and interest rate through a loan against a property EMI calculator. Computing your EMI amount in advance could help you plan the finances and segregate the funds accordingly to make timely payments and close the loan without any penalties.

 Prepare the relevant documents

A borrower needs to submit numerous proofs and land-related documents to the lender while applying for a mortgage loan. One should keep the below-mentioned documents ready at hand to avoid any last-minute delays.

• A recent photograph
• Proof of Identity 
• Address Proof 
• Age proof 
• Bank Statements (Bank statement /Bank Passbook for the last six months) OR Last six months salary slips
• Form 16
• Income Tax Returns for the last three years
• Documents related to the property offered as collateral (title deeds, building plans, approvals from relevant authorities, registration, etc.)

• Submit loan application online

Finally, one should apply online through the lender’s website by filling in relevant personal, employment, and property details. After successfully submitting the loan application and the required documents, the candidate shall receive a loan acceptance message from the lender. Subsequently, the required fund will be deposited in the candidate’s bank account upon further verification and approval by the loan department.