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. Read ahead to know more about the various types of mortgage loans.

Different Types of Mortgage loans

There are 6 types of mortgage loans in India, based on the nature of contract between the lender and borrower. They are described below - 

Simple Mortgage 

This is one of the most popular mortgages in India. These points will make it clearer - 

• The borrower mortgages his/her immovable asset to avail a loan 
• The property does not get transferred to the lender 
• The lender has the right to sell the mortgaged property in case the borrower fails to repay the loan on time
• On the occasion of sale of the property, after the bank takes the principle and the interest, the balance needs to be transferred to the owner
• This kind of mortgage is registered with the government, and is also known as a registered mortgage 

English Mortgage

The following points will explain the English Mortgage in detail - 

• In this case, the ownership of the mortgaged property is transferred to the lender 
• The lender is entitled to take possession of the mortgaged property in case the buyer fails to repay the loan amount by the decided date
• In this duration, the borrower is allowed to either rent the property or occupy it
• Once the payment has been completed, the lender is supposed to retransfer the possession to the borrower

Mortgage By Title Deed Deposit 

This is also referred to as the Equity Mortgage, and it is one of the two most popular ones in India. These points will explain it better - 

• In this case, the borrower transfers the documents or the title deed of the property to the lender in order to avail a loan. 
• The intent is to create a security as it becomes easier for the lender to recover their money.

Mortgage By Conditional Sale 

Here are some points that will explain this type of mortgage in detail - 

• The borrower sells the property to the lender on some conditions, which is referred to as a mortgage conditional sale
• If the borrower is unable to pay the amount that he owes, the sale will become absolute
• If the borrower successfully pays the loan, the sale will become void
• The fact that it is a mortgage sale is to be mentioned clearly in the mortgage deed so that it is not confused with a normal conditional sale

Usufructuary Mortgage 

If you are searching for ‘usufructuary mortgage meaning’, it is important to iterate that this type of mortgage is not used in India commonly. It can be explained through these pointers - 

• In this case, the borrower transfers or promises to transfer the possession of the mortgage to the lender
• The possession is supposed to stay with the lender until the borrower returns the money that he owes
• The lender can receive the rents and profits in lieu of the interest or the mortgage-money
• Once the payment is completed, the possession will be transferred back to the owner/borrower

Anomalous Mortgage

This is a type of mortgage that cannot be classified under any of the previous five types. If a mortgage deed is too customized, and uses points from one or more of the five types of standard mortgages, it is referred to as an Anomalous Mortgage.  

Difference Between Simple Mortgage and Equitable Mortgage

These two mortgages are the most commonly used in India. Let us look at the differences between them using this simple table - 

In India, mortgage loans are one of the most sought-after financial options, as they help raise funds using an existing property. They serve a great option where instead of selling your property, you can use it as collateral to get a loan and fulfill your diverse requirements. 

The following are some common examples or types of mortgage loans in India - 

1. Home loans
2. Loans against property
3. Second mortgage loans
4. Lease rental discounting
5. Loan to purchase commercial property

If you are a property owner and are looking for a loan against it, you can choose any kind of mortgage loan depending on your need.