Why is Income Proof Necessary for a Mortgage Loan?
A mortgage loan or a loan against property is a loan granted to both salaried and self-employed individuals against the mortgage of the property. The property used for the mortgage loan can be residential and commercial to get a loan for a tenure up to 10 years. Presently, the lowest rate of interest for loan against property stands at 8.70% along with a processing fee of 1% of the loan amount.
Why is Income proof an essential document to get a mortgage loan: Secured loans have a low risk of turning into bad debt. However, a mortgage loan is availed against the property, which has less liquidity in the market. The prices of these properties, whether commercial or residential, can eventually depreciate as per the market rates. Also, the procedure to sell this property is not at all an easy task. It is a primary reason why banks ask for income proof as an essential document to provide the mortgage loan. Having the regular sources of income as an income proof ensures that the borrower repays the loan on time, and banks do not suffer any loss.
How does having good income benefits the borrowers:
Having a stable income also gives the borrowers edge over individuals who don’t have a regular source of income. It is because the amount of loan and the rate at which the bank and various non- banking institutions provide a mortgage loan varies based on the income level. Taking a joint mortgage loan with someone who has a stable income improves the chance of getting a mortgage loan at lower interest rates.
Here is the list of income documents that you need for a mortgage loan:
- Latest six months salary slips in case of salaried individuals
- Latest six months bank statements
- Last two-year Income tax returns
Getting a mortgage loan without any hurdle: To avoid any complication in getting a mortgage loan, you must check your income proof eligibility. You can calculate your income eligibility for different banks by using a LAP EMI Calculator. A mortgage loan calculator or LAP EMI calculator is a financial tool that aids you to get an accurate idea about the monthly instalments that you need for the loan.
The amount of EMI that you need to pay for the loan depends on factors such as loan amount, rate of interest charged by different banks and the tenure of the loan. If you want to get a mortgage loan of a higher amount than the amount of EMI would also be high. Longer the mandate of the loan is, the higher is the amount of EMI. However, you must decide about the long tenure based on your eligibility to pay the mortgage. The amount of EMI is also dependent on the rate of interest and other charges levied by the bank. If the rates are high, then you have to pay more monthly installments and vice- versa.
Getting a mortgage loan without income proof documents: While income is a crucial factor in getting a mortgage loan. You can get a mortgage loan if you don’t have income proof. Having a high monthly balance in your account ensures that you get a loan without any hurdle. Also, opting for a lower loan to value can help to avail a loan without the income proof documents. Further, you must negotiate with the lending institution to explain the reasons for not holding the required income proof for a mortgage loan.
Thus, before availing a mortgage loan, you can calculate the amount of EMI that you can pay and then additionally take a joint loan with someone who has a regular source of income. Taking a loan with a co-applicant can help you to get a mortgage loan without any hurdle.
Summary :Why is Income Proof Necessary for a Mortgage Loan?
A mortgage loan or a loan against property is a loan granted to both salaried and self-employed individuals against the mortgage of the property. The property used for the mortgage loan can be residential and commercial to get a loan for a tenure up to 10 years. Presently, the lowest rate of interest for loan against property stands at 8.70% along with a processing fee of 1% of the loan amount.
Why is Income proof an essential document to get a mortgage loan: Secured loans have a low risk of turning into bad debt. However, a mortgage loan is availed against the property, which has less liquidity in the market. The prices of these properties, whether commercial or residential, can eventually depreciate as per the market rates. Also, the procedure to sell this property is not at all an easy task. It is a primary reason why banks ask for income proof as an essential document to provide the mortgage loan. Having the regular sources of income as an income proof ensures that the borrower repays the loan on time, and banks do not suffer any loss.
Thus, before availing a mortgage loan, you can calculate the amount of EMI that you can pay and then additionally take a joint loan with someone who has a regular source of income
