Types of Mortgage Loans

A mortgage loan is a secured loan where an applicant borrows a certain amount of money by mortgaging property. Hence, mortgage loans are also known as loans against property

Here, the property is collateral against which the loan amount is approved by banks or non-banking financial companies (NBFC). Residential properties, commercial properties, and immovable properties can be used as security for mortgage loans.

Until the borrower repays the loan completely, the property provided as mortgage will be in the lender’s ownership and the value of this mortgaged property will determine the amount you receive as loan.

Unlike home loans, the amount received as a mortgage loan can be used to meet both personal as well as professional requirements. There are no restrictions as to how and where the amount should be spent.

There are various types of mortgage loans based on various factors. Let us take a look at these:

Different Types of Mortgage loans

There are different types of mortgage loans in India and can vary based on criteria such as interest repayment, nature of the contract between the lender and borrower, etc.

Types of Mortgage Loans Based on Interest Repayment

Based on the mode of interest repayment, mortgage loans can be divided into the following categories –

Types of Mortgage Loans Based on Nature of the Contract

Based on the nature of the contract and terms and conditions between a lender and borrower, mortgage loans can be further divided into the following categories -

Importance of Mortgage Loans

In India, mortgage loans serve as one of the most sought-after financial options, if you want to raise funds with the help of your existing property. Instead of selling your property to meet your financial needs, you can use it as collateral to get a loan and fulfill your diverse requirements. 

And unlike other secure loans such as home loans, a mortgage loan is like a personal loan where you can use the loan amount to fulfill your diversified needs without restrictions. It’s one of the easiest ways of raising funds.

The only requirement is that you have to be the official owner of the property that you want to use as collateral

Types of Mortgage Loans - Related FAQs

Ans: This is a type of mortgage loan that does not fall under conventional mortgage loan categories.
Ans: Most first home buyers prefer to opt for a mortgage loan when it comes to purchasing a home. There are different types of mortgage loans available for first-time homebuyers in India.
However, it is important for first-time home buyers to understand how much down payment they can offer and accordingly ask for financial aid. There are conventional and government-backed mortgage loans available in the market.
The right one should be chosen carefully after understanding the market condition, comparing the interest rates offered by various lenders, and analyzing your capacity for loan repayment. In this case, a mortgage broker can help you choose the most competitive home loan deal available in the market.

Ans: There are multiple benefits associated with opting for a mortgage which include –

  • A borrower can avail almost 70% of the property value as loan amount

  • There is no restriction on the end use of the loan amount. It can be used for fulfilling both personal and business requirements

  • Flexible and long repayment tenure that goes up to 15 to 20 years

  • Simple eligibility criteria. Both salaried and self –employed individuals can apply for it

  • Higher amount can be availed as compared to other loans

  • Loan offered against both residential and commercial properties

  • Minimal documentation required

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