Different Types Of Mortgage Loans In India For Which You Can Apply

A mortgage loan is a type of loan where a property or real estate is used as collateral to borrow money. The borrower enters into an agreement with the bank wherein the borrower receives cash upfront then makes payments over a set time span until he pays back the lender in full. Mortgage Loans in India are one of the most popular forms of loans applicable to real estate mainly for those interested in buying a property.

However; consumer can borrow mortgage loans for various financial reasons such as buying machinery, expanding business, to stock up inventory etc.

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The borrowers for mortgage loan in India can be from different categories –  individuals or business houses. The mortgage loans in India borrowers requires keeping a piece of property, flat or land while the latter includes commercial spaces and business premises as a collateral.

Understand How Mortgage Loans In India Work?

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Understand the important aspects of mortgage loans in India offered to the consumers and its working:

• The installments or EMI of mortgage loans in India comprises of the payment of the principal amount, loan against property interest as applicable, other charges of insurance, and taxes as applicable.
• The loan against property loan may look very appealing; from where huge amount of funds and capital can be raised. However, the loan applicant must be cautious before applying understanding the repayment capacity.
• The proper detail and schedule of property purchase should be clarified to the bank as per the amortization schedule.
• The foreclosure charges are done by the RBI. Hence; before seeking mortgage loans in India, it is important to read the loan offer document carefully before availing the loan or signing any document.
• The overall costing of the project also includes the 15% cost bearing by the borrower, the payment being initial.

Different Types Of Loan Against Property In India

Below mentioned are the different types of loan against property available each with the brief explaining:

Simple Mortgage

It is one type of mortgage loan; categorized under loan against property. Here the bank – (term used is Mortgagee) does not require acquiring the ownership of the property. However, he/she has the authority of mortgaging the land in case the loan availer fails to repay the loan.

English Mortgage

In this type of mortgage loans, the loan amount has to be repaid at a mentioned date which is agreed by the bank as well as the mortgagor.  The loan availer should repay the loan by a certain date and if failed; the bank or the lender holds all the right to sell away the property.

Usufructuary Mortgage

In this loan type, the borrower passes on the possession of property to the mortgagee (bank or lender). If the property is profitable, the monetary gains are passed on to the mortgagee (bank or lender) till the loan is repaid.

Mortgage by Deposit of Title Deeds

A method of pledging real property as security for a loan, by placing the title-deeds of the land in the keeping of the lender as pledgee. 

Mortgage by Conditional Sale

In this type of mortgage loans, the loan applicant (the borrower) purposely sells the collateral property on stake in case the mortgage amount stays unpaid by the mutually decided date, or the sale of mortgage does not hold any value, or the mortgagee re-assigns the property to the mortgagor.

Reverse Mortgage

As the name suggest, the proceedings of the loan happen the opposite or in the reverse mode. Usually what happens in normal loans, the borrower pays monthly installments. However, in a loan with a reverse mortgage type, the lender pays monthly amounts of mortgage money to the mortgagor. 

In General  – The Process 

Applying for the mortgage loans in India can be a little tough; but if done it with right documents and suggested process it is hassle free. Carefully read the terms and condition weighing the pros and cons of the bank that you have shortlisted.

As the first step for choosing loan against property, the applicant needs to approach a suitable bank with the required documentation. Once the verification of the submitted documents is done the loan gets approved. The loan approval involves good amount of time.  It requires following certain process such as appraisal of credit by applicant’s bank, collection of the documents against the property by the bank, legal verification and etc.

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