Mortgage Loan Meaning in Hindi with Example

A mortgage loan, known as "गृह ऋण" in Hindi, is a type of loan that individuals take out to purchase a home. The loan is secured by the property itself, meaning that if the borrower fails to repay the loan, the lender has the right to take ownership of the property through a legal process called foreclosure. This type of loan is commonly used in India and across the world as a means for people to buy homes without having to pay the full price upfront.

Understanding Mortgage Loan in Hindi

In Hindi, a mortgage loan is referred to as "गृह ऋण" or "बंधक ऋण." The term "गृह ऋण" specifically denotes a loan taken for the purpose of purchasing a home, while "बंधक ऋण" refers to a loan secured by any immovable property, which could be a house, land, or commercial property. The concept of a mortgage loan is relatively straightforward: the lender provides the borrower with funds to purchase a property, and in return, the property serves as collateral until the loan is fully repaid.

Example of a Mortgage Loan

Consider Mr. Sharma, who lives in Delhi and wishes to purchase a house worth ₹50 lakhs. However, Mr. Sharma does not have the full amount required to buy the property outright. He decides to approach a bank for a mortgage loan.

• Loan Amount: ₹40 lakhs (80% of the property's value)
• Down Payment: ₹10 lakhs (20% of the property's value)
• Interest Rate: 7.5% per annum
• Loan Tenure: 20 years

In this scenario, Mr. Sharma applies for a mortgage loan of ₹40 lakhs, with a down payment of ₹10 lakhs. The bank agrees to provide the loan at an interest rate of 7.5% per annum for a tenure of 20 years.

Repayment of the Mortgage Loan

The repayment of the mortgage loan will be done through Equated Monthly Installments (EMIs). The EMI includes both the principal amount and the interest. The formula to calculate EMI is:

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

Where:

• P = Principal loan amount
• R = Monthly interest rate
• N = Number of monthly installments

Using this formula, Mr. Sharma's EMI would be calculated based on the loan amount, interest rate, and tenure. Over the course of 20 years, Mr. Sharma will make monthly payments until the entire loan is repaid. If Mr. Sharma fails to make these payments, the bank has the legal right to foreclose on the property, which means they can take possession of the house and sell it to recover the loan amount.

Types of Mortgage Loans in India

There are several types of mortgage loans available in India, each catering to different needs:

1. Fixed-Rate Mortgage Loan: In this type of loan, the interest rate remains constant throughout the loan tenure. It provides stability as the EMI amount does not change, making it easier for borrowers to plan their finances.

2. Floating-Rate Mortgage Loan: The interest rate in a floating-rate mortgage loan fluctuates based on the market conditions. This means that the EMI can increase or decrease over time, depending on the changes in the interest rates set by the Reserve Bank of India (RBI).

3. Home Construction Loan: This type of mortgage loan is specifically for individuals who wish to build a house on a piece of land they own. The loan is disbursed in phases, depending on the progress of the construction.

4. Home Improvement Loan: A home improvement loan is for homeowners who wish to renovate or make improvements to their existing home. This loan covers expenses such as repairs, painting, and upgrading facilities.

5. Home Extension Loan: This loan is for homeowners who want to extend or expand their existing home, such as adding new rooms or floors.

Key Features of Mortgage Loans

1. Collateral-Based: The primary feature of a mortgage loan is that it is collateral-based. The property being purchased serves as security for the loan, which reduces the risk for the lender.

2. Long Tenure: Mortgage loans typically have long tenures, ranging from 10 to 30 years. This makes the EMI more affordable for borrowers, as the repayment is spread over a long period.

3. Tax Benefits: Borrowers can avail of tax benefits on the interest paid on mortgage loans under Section 24(b) of the Income Tax Act, 1961. Additionally, they can claim deductions on the principal repayment under Section 80C.

4. Prepayment Option: Most mortgage loans offer the option to prepay the loan either partially or fully before the tenure ends. This can help borrowers save on interest payments.

Eligibility Criteria for Mortgage Loans

To be eligible for a mortgage loan, borrowers must meet certain criteria set by the lenders. These criteria may include:

• Age: Typically, borrowers should be between 21 and 65 years of age.
• Income: Lenders assess the borrower's income to ensure they have the financial capacity to repay the loan. A stable income source is crucial.
• Credit Score: A good credit score (usually 750 and above) is essential to secure a mortgage loan with favorable terms.
• Property Valuation: The lender will conduct a valuation of the property to ensure it meets the standards and is worth the loan amount.
• Employment Status: Both salaried individuals and self-employed professionals are eligible for mortgage loans, provided they have a stable employment history.

Conclusion

In conclusion, a mortgage loan or "गृह ऋण" is an essential financial tool that enables individuals to own a home by borrowing funds from a lender. The property serves as collateral, and the loan is repaid through EMIs over a specified tenure. Understanding the different types of mortgage loans, their features, and the eligibility criteria is crucial for making an informed decision when applying for one. With proper planning and management, a mortgage loan can help you achieve the dream of owning your own home while enjoying the benefits of long-term financial security.