A mortgage loans is a process in which a person borrows money from a lender(bank loans) and signs an agreement and, in return, gets money in exchange for a real estate property as a guarantee with the bank until the total amount is repaid.
Types of Mortgages
There are different types of mortgages available to prospective borrowers.
1. Simple Mortgage
It is an agreement stating that if the borrower is unable to repay the loan amount in full within a specified time period, then the lender can sell the property that was offered as collateral to recover the amount. The property is still in the name of the borrower.
2. English Mortgage
In this type of mortgage loan, the borrower has to transfer the property in the name of the lender at the time of making money with the condition that the property will be transferred back to the borrower once the complete amount is paid.
3. Fixed-rate Mortgage
In this type of mortgage, the lender assures the borrower that the rate of interest will remain the same throughout the loan period.
4. Mortgage by Conditional Sale
Under this mortgage loan, the lender can put a certain number of conditions that the borrower must follow in terms of repayment. Conditions can be like the sale of the property if there is a delay in monthly installments or an increase in the rate of interest due to a delay in repayment.
5. Reverse Mortgage
In this mortgage loan, the lender will lend money on a monthly basis to the borrower. The loan amount is divided into installments, and the lender gives the money in installments.
6. Usufructuary Mortgage
In this case, the property is transferred to the lender, and he can earn profits from the same. The lender can use the property for rent or other purposes until repayment of the amount. Still, the primary rights are with the owner.
7. Equitable Mortgage
In this case, the lender is given the title deeds of the property. This is common in bank mortgage loans to secure the property.
8. Anomalous Mortgage
It is the combination of various types of mortgages available.
Mortgage Loan process.
Before starting the mortgage loan process, make sure it is the right option for you. Research your options properly and decide. Different banks will offer different interests, repayment tenures, and so on.
Once you have decided on the bank, you can apply and check their eligibility criteria and application requirements for the loan.
If you are eligible, you must gather all the required documents, including identity proof, address, income, and property-related documents.
You can also choose the bank option for online mortgage loans or visit the nearest branch.
Based on the type of collateral, mortgage loans can be divided into three categories:
- Home loans
- A loan against property
- Commercial property loans
Mortgage loan rates range from 8.15% to 11.80%pa. Usually, the amount of funding you can get will be up to 60% of your registered value of the property. Some banks even offer loans up to Rs 10 crore to their customers. The repayment time for mortgage loans can be up to 15 years.
Benefits of a Mortgage loan:
- It is a cost-effective way of borrowing money. You can take a mortgage loan for a longer duration and pay off repayments by using smaller amounts EMIs.
- Mortgage loans have a lower rate of interest than any other loans.
- You can loan for an extended period of time.
- The documentation process is very easy.
- You can get a higher amount of funds.
- You can get a mortgage loan online and offline at your convenience.
- Funds received from mortgage loans can be used for business and personal needs as well.
- You can get mortgage loans anywhere in India.
- Banks offer attractive interest rates on mortgage loans.
Conclusion
Mortgage loans are secured loans. It refers to the process in which a borrower keeps something as a guarantee against a loan. The borrower has to repay the loan amount as a monthly installment. A mortgage loan can be used to buy a house or refinance a property. A refinance means getting a new loan for a property while the original loan is still being repaid. A mortgage loan is preferred by borrowers who are looking for a vast amount of money by keeping the property as their guarantee.
