Millions of people in India are now able to meet their diverse financial needs thanks to mortgage loans, which have become an essential component of the country’s financial landscape. Real estate buyers can receive these loans by mortgaging their owned property as security for the loan, and existing property owners can use them to cover other financial costs. Mortgage Loans are offered in a variety of formats to accommodate the differing needs and financial circumstances of borrowers. In this post, we’ll examine the several kinds of mortgage loans offered in India, each of which has its own qualities and advantages.
Types of Mortgage Loan
- 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. - 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. - 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
- 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. - 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. - 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