Varieties of Mortgages

The most enticing, the most favoured and the most sought-after secured loan is undeniably mortgage loans. They provide you with endless features, benefits, and facilities in their offers. Banks and NBFCs proffer this secured loan. The borrower promises their real estate or property to lenders in order to gain funds. Approximately 70% of the recent property value is offered as the loan value. There are many types of mortgage loans that are offered based on what will entreat to people. Ventures or individuals pledge their owned property as collateral for security.

Below are the different types of Mortgage Loans in India:

1. Loan against Property (LAP)

Loan against Property is generally known as LAP. LAP is provided for commercial and residential properties. The borrowers have to mortgage their property in order to get capital from the lending organization. The original documents of the property have to be kept with the lender till the time the loan is returned in full. The repayment of such loans is done on EMI basis. Borrowers can use the loan value for any personal or professional requirements. Many banks and NBFCs present an option to calculate loan against property EMI on their website. This is for the appropriacy of the borrowers. These loans generally have a tenure of up to 15 years.

2. Commercial Purchase

Commercial purchase loans are widely taken by businessmen and entrepreneurs. They take such loans to procure commercial properties like a shop, office space, and commercial complex. This loan is appropriate for such purchases. The interest rates offered by banks and NBFCs are insistent. Funds from this loan mandatorily are to be used to buy the property only.

3. Lease Rental Discounting

Leasing our own residential or commercial property is a very ordinary practice. Mortgage loans can also be taken against the leased properties too. This is known as ‘lease rental discounting’. The monthly rent amount itself is permuted into EMI and the loan amount is given on that basis. The loan tenure and the loan amount, both are subject to the tenure as to till when the property will be kept leased. The lease agreement is cited to by banks and NBFCs who are offering the loan.

4. Second Mortgage Loan

Banks and NBFCs offer Second Mortgage Loan for properties which are currently under a loan. If a borrower purchases his property by taking a loan today, he can take an additional loan on the same for personal requisites. When a borrower applies for a Second Mortgage Loan, it is often called a top-up loan on a home loan. Based on the borrower’s credit score as well as loan repayment history, the lender will facilitate additional required loans. The borrower has to start paying the EMI of the second mortgage loan along with the first mortgage home loan.

5. Reverse Mortgage

A reverse mortgage has been freshly introduced in India. It is a unique loan, which is introduced for senior citizens. There are many senior citizens who do not have a stable or sufficient monthly flow of income. However, many of them own real estate in some conformation or the other. So they can opt for this. A reverse mortgage works precisely the contradiction of mortgage loans. The way it functions is that they have to keep their property as a mortgage with the bank or with the NBFC. The lender then pays them a balanced amount of income each month like EMIs. On the demise of the senior citizen, the bank or the NBFC has the authority to sell the property. The loan amount that is paid to the senior citizens is directly subtracted from the amount in which the real estate is sold. The residual amount is returned back to the legal heirs of the departed senior citizens.

6. Home Loan

The most customarily sought after loan in India is a home loan. Consumers appeal for small, medium, and substantially big-sized home loans. This is because the interest rates are combative, durations are comfortable, and one gets a tax advantage. One gets the opportunity to refurbish, redecorate, and re-build their home. One can bag a home loan for acquiring land to build a house or to build a house on land that is purchased or to even purchase an under-construction property. This can be accomplished for new or resale properties. However, the funds that are taken as a home loan by the borrower have to necessarily be used for the home only. Home loans cannot be utilized for any other personal or business necessities.

There are positive changes for the Home-Buyers as reductions have been made in home loan rates. Home loan eligibility depends upon the repayment scope, income, prevailing loans or debts and the age of the loan applicant. Companies like Tema Fintech are facilitating Home Loans that are financially beneficial such as minimal EMIs where you can space out your installments over a longer tenure, desirable interest rates and some uniquely special advantages. This will help the buyers to attain the sophisticated home and lifestyle they have always been wishful for. Now that you have an idea of the appropriate kind of loan for your home purchase, it’s also necessary to find the right mortgage lender to make it happen. Every lender is unique, and it’s significant to compare them to find the best terms that suit your finances. From the brick-and-mortar bank and credit unions in your vicinity to online-only mortgage companies, there is a vast range of alternatives to choose from.

Have you ever applied for a mortgage and if yes, which category is more beneficial?

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