In recent times, mortgage loans have emerged as the primary choice of loans for the unsalaried population. In this article, we have tried to decode the major reasons behind the unprecedented popularity of mortgage loans.
The Best Loan Option for the Unsalaried Person: Mortgage Loans
These days, it is quite challenging to get a loan for an unsalaried individual. Nearly all loans require income proof as a part of their documentation process. And popular loan options like personal loans are only restricted to salaried people. Hence, the unsalaried individuals, who require a loan the most but have no guaranteed source of income, are left with very few options. But fortunately, to aid such individuals, mortgage loans have emerged as a great solution to fund their necessities. Here, you will get to know why this loan type is one of the best loan options, especially for the unsalaried people.
Advantages of Mortgage Loans:
1-: Lower Interest Rate:
As the mortgage loan is secured in nature, the interest rate is relatively lower in contrast to the personal loan. You can expect the mortgage loan interest rate to lie between 12%-15%, whereas personal loan usually charges an interest rate of 15%-25%.
2-: No Prepayment Charges:
Unlike other loans, you don’t have to worry about the prepayment charges when it comes to mortgage loans. You can opt for repaying the borrowed amount before the previously agreed term, without paying any additional fees. It will help you to minimize the interest burden over you.
In the case of mortgage loans, you have to keep your property as collateral to secure the loan. Therefore, financial institutions willingly provide you with the loan amount, without fearing any possible NPA. And as the mortgage loans are widely available across the country and easier to get, you can consider this loan during times of emergency as well.
4-: Repayment Period:
Generally, the tenure of a mortgage loan is significantly longer than any other loans. On average, you will get a whopping 15 years to repay the loan amount. However, the tenure depends on the loan amount and agreement with the respective financial institution.
5-: Low EMI:
The repayment time frame is inversely proportional to the EMI. Hence, the longer the loan repayment period, the lower will be the monthly installment and vice versa. As these loans have a relatively long tenure, you can expect minimal EMI installments.
6-: You remain the Owner of your Property:
A mortgage loan allows you to hold complete ownership of your property. However, under a worst-case scenario, you have the option to sell the property and settle the loan amount.
Purpose of Taking Mortgage Loans
Mortgage loans can be used for multiple purposes. However, financial institutions or lenders don’t encourage investing money in risky affairs.
Here are some of the reasons for taking mortgage loans:
- Finance your child’s higher education
- To tackle any unforeseen medical emergency.
- Child’s marriage
- Expanding your existing business
- Travel Abroad
You can get a loan amount that is 60%-70% higher than the market value of the property being mortgaged. The lower mortgage loan interest rate or loan against property interest rate, easy availability, long tenure are some of the significant benefits of mortgage loans which make it one of the best loan options for unsalaried individuals.