What are the Types of Mortgage Loans in India?

Mortgage loans by Hero FinCorp allow individuals to purchase or refinance a property. Choosing the right type of mortgage loan matters for your financial well-being. The availability of so many options makes it hard to choose the most suitable one. This piece explores mortgage loans and their types and the key factors one must consider while applying for a mortgage loan.

What is a Mortgage?

A mortgage is a loan specifically used to purchase real estate, like a house or land. It's secured by the property itself, offering lenders assurance that they can recover their funds if the borrower defaults. Typically, mortgages involve monthly payments comprising principal (loan amount) and interest, spanning many years until fully repaid.

How Mortgages Work

A mortgage is a loan specifically used to purchase real estate, like a house or land. It's secured by the property itself, offering lenders assurance that they can recover their funds if the borrower defaults. Typically, mortgages involve monthly payments comprising principal (loan amount) and interest, spanning many years until fully repaid.

The Mortgage Process

The mortgage process in India for different types of loans involves several steps. For Loan against Property (LAP), the property's value is assessed, and the loan amount is determined based on it. In Commercial Purchase, the property's suitability for business purposes is evaluated. Lease Rental Discounting involves using future rental income as collateral. Second Mortgage Loans require an existing mortgage to be used as security. And in Home Loans, the borrower's eligibility is assessed, and then the loan amount and interest rate are determined based on factors like income, credit score, and property value.

6 Different Types of Mortgages In India

While considering a mortgage loan in India, it's important to know the types of mortgages available. Each type has its conditions, so choosing the one that suits your situation is essential.

Note: Interest rates are subject to change based on market conditions and lender policies.

1. Simple Mortgage:

The borrower pledges the property as collateral but retains possession. In default, we can sell the property to recover the outstanding loan amount.

2. Mortgage by Conditional Sale:

In this type of mortgage, you sell any property to us, but with the condition that the sale will become absolute if you fail to repay the loan on a specific date. On the other hand, if you repay the loan, the sale becomes void, and we transfer the property back to you.

3. Usufructuary Mortgage:

Among the different types of mortgage loans, in this type, the borrower transfers the possession of the property to the lender, who in turn uses the pledged property to generate income. Hero FinCorp adjusts the income generated from the property in the overall loan amount. The borrower gets the property back after repaying the loan in full.

4. English Mortgage:

English mortgage requires the borrower to repay the loan on a certain day and transfer the property to the lender as collateral. The lender returns it upon repayment of the loan. Here, the borrower is personally liable for repaying the loan.

5. Mortgage by Deposit of Title Deeds:

This is also known as an equitable mortgage. In this type of mortgage, the borrower deposits the property documents as collateral for the loan. No registration is required. This type of mortgage loan works like a simple mortgage.

6. Anomalous Mortgage:

A mortgage that is not a simple mortgage, a mortgage by conditional sale, a usufructuary mortgage, an English mortgage, or a mortgage by deposit of title deeds within the meaning of this section is called an anomalous mortgage. An anomalous mortgage is a combination of two or more mortgages.

Different Types of Mortgage Loans in India

Explore the diverse landscape of types of mortgage loans in India, including Loan against Property, Commercial Purchase, Lease Rental Discounting, Second Mortgage Loan, and Home Loan options.

 Loan against Property (LAP)

Loan against Property (LAP) allows individuals to leverage their owned residential or commercial property to secure substantial funding for various purposes, such as education, medical expenses, or debt consolidation.

Commercial Purchase 

Commercial ventures often require significant financing for purchasing new plants, machinery, or other business needs. In such scenarios, an unutilised commercial property can be used as a valuable asset to meet the funding requirements.

Lease Rental Discounting 

Lease Rental Discounting allows borrowers to secure a loan by using the anticipated rental income as collateral, this enables them to meet financial needs. 

Second Mortgage Loan 

Second Mortgage Loan enables borrowers to utilise the equity of their existing property to secure additional financing for various purposes. 

Home Loan 

Home Loans provide individuals with the means to purchase or construct residential properties through tailored financial assistance.

How to Compare Mortgages

Before comparing, it’s crucial to understand different mortgage loan types. Start by evaluating your financial goals and preferences. Consider factors such as interest rates, loan terms, repayment options, and eligibility criteria. Extensively research and evaluate various mortgage options based on fixed-rate mortgages, adjustable-rate mortgages, government-backed loans, and more. You can seek professional advice from top NBFCs like Hero FinCorp to gain insights into the best mortgage loan type that suits your specific needs. Following this will help you make a well-informed borrowing decision.

Mortgage Loans by Hero FinCorp

At Hero FinCorp, we have a wide range of mortgage loans. Whether for your dream home, expanding your business, or meeting any other financial requirement, Hero FinCorp offers different loan products. We offer different mortgage types, home loans, loans against property, and loans against commercial property. The loans have flexible repayment options, affordable interest rates, and quick approval processes.  Our team of experts are always available to assist you in choosing the right mortgage loan that suits your specific needs. Whether you are planning to purchase a new property or need funds for business expansion, Hero FinCorp's mortgage loans can be the perfect solution for any situation.

How to Apply for a Mortgage Loan?

Here's how you can easily get funds with Hero FinCorp's mortgage loan:

• Visit Hero FinCorp's mortgage loan webpage.
• Check your eligibility from the eligibility criteria section available on the website.
• Check for the mandatory documents required for a mortgage loan.
• Click the 'Apply now' tab and fill in the required information, and submit the online form.
• Once Hero FinCorp is satisfied with your details, their executives will get in touch with you.
• You may also apply for a mortgage loan by visiting the nearest Hero FinCorp branch or outlet.

Conclusion

Understanding different types of mortgage loans is vital when choosing the right option for your financial needs in India. Be it Simple Mortgage, Mortgage by Conditional Sale, English Mortgage, Fixed-Rate Mortgage, Usufructuary Mortgage, Anomalous Mortgage, Reverse Mortgage or Equitable Mortgage, each one has their pros and cons. At Hero Fincorp, we guide you through the mortgage loan process, ensuring you find the perfect fit for your funding needs. Time to a make well-informed decision today!

Frequently Asked Questions

1. What is the duration of a mortgage loan?

The duration of a mortgage loan typically varies based on the loan agreement terms between the borrower and the lender. The loan term can range from a few years to several years, depending on the type of mortgage loan and the borrower's financial situation. Generally, a longer loan term means lower monthly payments. It also means paying more interest during the tenure of the loan. You can use a mortgage calculator to compute the possible repayment amount.

2. Is a mortgage a bond?

No, a mortgage is not a bond. A mortgage is a loan secured by real estate property. A bond is a type of investment that represents a debt obligation. Although both mortgage loans and bonds involve borrowing and lending money, they are fundamentally different financial instruments.

3. What is the largest category of mortgages?

The largest category of mortgages is typically the residential mortgage market. This category offers loans to purchase or refinance single-family homes, condominiums, and other residential properties. This category of mortgages accounts for a significant portion of the overall mortgage market and is a key driver of the housing industry and the broader economy. Other categories of mortgages include commercial mortgages, construction loans, and government-backed mortgages such as FHA and VA loans.

4. What are the key difference between equitable mortgage and registered mortgage?

The key difference between equitable mortgage and registered mortgage lies in their legal standing: equitable mortgage involves depositing title deeds with the lender, while a registered mortgage requires registration with the appropriate authority for legal validity.