How can Homebuyers Benefit from Mortgage Guarantee?

Posted by Imgc India on October 13th, 2017

The decision of buying a home is a big financial decision in the life of an average Indian, and many make that decision only once. They save for years so that they can turn the dream of owning a home into a reality. For that, many people apply for home loans. However, due to some reasons, many of them do not qualify for the amount of home loan they require, and this creates an obstacle in buying a home.

Mortgage Guarantee helps the homebuyers to be eligible to avail a home loan. The only thing that a homebuyer needs to do is ask the bank or NBFC (Non-Banking Financial Loan) to back their loan with mortgage guarantee by IMGC. With easy home loans, mortgage guarantee assists by providing longer loan tenures, higher loan eligibility, and higher loan amounts, thereby encouraging early home ownership.

When first told about the mortgage guarantee, almost every homebuyer may ask what mortgage guarantee is. For the sake of understanding, here’s a simple definition: -

Mortgage Guarantee is a kind of an insurance that is provided to the lenders (bank or NBFC) against the defaults on loan. This insurance mitigates the risk the lender is taking by offering the loan to a buyer. Once that risk is reduced, the lender is able to offer better loan terms so as to suit the needs of the homebuyer. With mortgage guarantee, even if the homebuyer is not able to pay few of the EMIs, he/she can relax without any worry and continue paying whenever they can.

The next question that homebuyers ask is how they can benefit from mortgage guarantee? Well, here’s how: -

1.Transformation of an expense to an asset

Many people live in a leased apartment where they have to pay monthly rent, which is an expense. With mortgage guarantee backed home loans, a homebuyer can have a longer loan repayment tenure and higher loan-to-value to buy a home of their own. Thus, the money that the homebuyer was earlier spending on paying the rent will now be going towards paying the EMIs of his/her own home and thereby, assisting in formation of an asset.

2.Building an Asset in Later Years of Life

With longer loan repayment tenure, homebuyers can buy a home in later years of life, like between the age bracket of 45 and 55 years. These home loans are especially beneficial for salaried individuals who have a source of income beside their work, and can pay the loan EMIS with their existing liabilities and expenses. Mortgage Guarantee helps by allowing the homebuyer to continue paying the EMIs even after his/her retirement.

3.Up-gradation of Home

Each individual has different needs during the different phases of his/her life. If a person already has a home, he/she can avail the home loan to renovate or upgrade it.

To get started, a homebuyer has to ask the lender to process their loan with mortgage guarantee. IMGC, India’s first and only Mortgage Guarantee Company, will assess the application and determine the amount of home loan that a buyer is eligible for.

But, who can avail this benefit?

Mortgage guarantee backed home loans are primarily for homebuyers who have limited resources and want to spend their hard-earned saving once and properly without putting unnecessary financial burden on themselves. These can be salaried individuals, small-scale businessmen, or seasonal freelancers.