What is a mortgage loan?
A mortgage loan is a secured loan used to purchase real estate property. The property itself serves as collateral for the loan. If you fail to repay, the lender can foreclose and take possession of the property.
How much down payment is required?
Typically 20% down payment is recommended to avoid PMI (Private Mortgage Insurance). However, some lenders offer mortgages with as low as 5-10% down payment, though this usually requires PMI and may have higher interest rates.
What is PMI?
PMI (Private Mortgage Insurance) is insurance that protects the lender if you default on the loan. It's typically required when your down payment is less than 20% of the home's value. Once you reach 20% equity, you can request to cancel PMI.
What is LTV ratio?
LTV (Loan-to-Value) ratio is the percentage of the home's value that you're borrowing. For example, with 20% down payment, your LTV is 80%. Lower LTV usually means better interest rates and loan terms.
What are property taxes?
Property taxes are annual taxes levied by local governments based on the assessed value of your property. Rates vary by location but typically range from 0.5% to 2% of the property value annually. These are usually paid monthly through your mortgage payment into an escrow account.
What is included in home insurance?
Home insurance (homeowners insurance) covers damage to your home and belongings from fire, theft, natural disasters, and liability. Lenders require this to protect their investment. Cost varies based on location, home value, and coverage amount.
What are HOA fees?
HOA (Homeowners Association) fees are monthly or annual charges for maintaining common areas and amenities in planned communities, condos, or apartments. These fees cover landscaping, security, pools, gyms, and other shared facilities.
Can I get tax benefits on mortgage in India?
Yes! Under Section 80C, you can claim up to ₹1.5 lakh deduction on principal repayment. Under Section 24(b), you can claim up to ₹2 lakh on interest for self-occupied property (or full interest for rented property). First-time buyers get additional ₹50,000 under Section 80EEA.