Types of Mortgage Loan

Different Types of Mortgage Loans in India

September 06, 2023 • 1198 views

Mortgage Loans have become an integral part of the Indian financial landscape, enabling millions of people to fulfil their various financial needs. These loans are obtained by real estate buyers to raise funds for buying property or existing property owners for some other financial expenses by mortgaging their owned property as collateral for security.  Mortgage Loans come in various forms, tailored to meet the diverse needs and financial situations of borrowers. In this article, we will delve into the different types of mortgage loans available in India, each offering unique features and benefits.

Types of Mortgage Loan

1.    Loan Against Property
Also known as Property Mortgage Loan, Loan Against Property is a type of secured loan in which the borrower pledges their property as collateral in exchange for a loan. This type of loan is offered for commercial, residential, and rental properties. The amount of the loan is typically based on the value of the property being used as collateral and can range from a few lakhs to several crores. The loan amount can be used for large expenses such as home renovations, medical expenses, or debt consolidation. The interest rates for Loan Against Property are generally lower than unsecured loans, as the lender has the security of the property in case of default. However, it is important to carefully consider the risks involved before taking out a Loan Against Property, as failure to repay the loan can result in the loss of the pledged property.

2.    Commercial Purchase Loan
Another popular type of mortgage loan is the Commercial Purchase Loan.  This type of loan is taken by businessmen and entrepreneurs to finance the purchase of commercial properties such as office buildings, retail spaces, or industrial warehouses. Similar to a Loan Against Property, the property being purchased is used as collateral for the loan. The amount of the loan is typically based on the value of the property and the borrower's ability to repay the loan. Interest rates for commercial purchase loans can vary depending on the lender and the borrower's creditworthiness. It is important to carefully consider the risks involved before taking out a commercial purchase loan, as failure to repay the loan can result in the loss of the purchased property.

3.    Housing Loan
As the name suggests, a Housing Loan is a type of loan that is used to finance the purchase of a residential property, such as a house or a condominium. The property being purchased is used as collateral for the loan, and the amount of the loan is typically based on the value of the property and the borrower's ability to repay the loan. The amount secured from this loan can be used to buy flats, bungalows, and independent houses. It can also be used to build additional floors on your house and for renovation purposes. 

Conclusion

In conclusion, there are several types of mortgage loans available in India that cater to different needs and requirements. Conduct thorough research and compare various lenders based on their features, interest rates and other loan terms to find the option that’s right for you.

Frequently Asked Questions About Mortgage Loan

1.    What is the interest rate on a mortgage loan?
Usually, the interest rates on a mortgage loan start from 9% per annum. However, it may vary significantly depending on factors such as lender, loan type, borrower’s credit score, etc. 
2.    Are home loans and Mortgage Loans the same?
No, they are not. A home loan is given to people for buying or constructing a house. On the other hand, a Mortgage Loan, also known as a Loan Against Property (LAP), can be used to fund any personal or business needs.
3.    Which documents are required for a Mortgage Loan?
The list of required documents may vary from lender to lender since each lender has its own document requirement for Mortgage Loans. But here are some primary documents that you will need to submit:

  • KYC Documents: PAN Card & Aadhaar Card
  • Address Proof:  Electricity Bill, Passport, Rent Agreement
  • Income Documents: Three-month salary slips
  • Financial Documents: Bank account statement for the last 12 months
  • Property Documents: Important papers related to the property you want to mortgage

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan Against Property disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

We are a team of expert writers and editors passionate about providing our readers with authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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