Term of Mortgage

Term of Mortgage depends on the kind of mortgage applied for, like the fixed rate mortgage is spread over a period of 10 to15 years and the adjustable rate mortgage is spread over a comparatively short time span like 2 years, 5 years or 7 years.

The term of mortgage in India is very flexible, as the Indian financial institution are engaged in aiding the citizens to pay off their loan amounts at their convenience, and this is the reason behind the formulation of various tenures for mortgages. However, the rates of interest, the tenure and the amount of loan may vary depending on the terms and conditions of the different financial institutions.

The existing term of mortgage prevalent in India in general is designed in such a way that the repayment of a loan of Rs.1lakh can be extended for a period of 10 years, but the rate of interest in that case will be as high as 7.75 % , however if the tenure of the same loan amount is reduced to 2 years, then the rate of interest comes down to 7.5 %. The rate of interest remains same for the same loan amount when the term of mortgage extends to 5 years. The maximum term of Mortgage allowed for repayment of a loan amount of Rs.1lakh is 15 years.

In case the loan amount is Rs.5lakh the term of Mortgage, in general, may range from 2 to 15 years, and the interest rate will the same as was applicable for Rs.1lakh, i.e. 7.5 %, for 2 year as well as 5 year loan period . However, the moment when the loan period is enhanced to 10 or 15 years, then the pressure of rate of interest is altered to 7.75 %.

For loan amount as much as Rs.25lakh, the rate of interest in general, remains 7.5 %, when the term of Mortgage is 2 and 5 years, and in the event the term of Mortgage is raised to 15 years, the interest rate rises to 7.75 %. However, the most interesting fact is that, for huge loan amounts like Rs.100crore the rate of interest remains fixed at 7.75 %in general, for the different loan periods, staring from 2 years to extending to15 years.

The Indian citizens therefore, are able to choose from the different term of Mortgage according to their convenience. The Indian banks like the State bank of India, Citibank, HSBC, HDFC as well as ICICI, some of the cooperative societies and the different housing finance corporations in India offer such flexible tenure of mortgage.

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