In India mortgage loans are the most favored loans by people. They come with extraordinary benefits and features. It’s a type of secured loan offered by almost all banks and NBFCs across nation. In this type of loans, the borrower has to mortgage his or her property to the lender to get funds. Banks and NBFCs offer 70% to 80% loan amount based on the current property value.
Banks and NBFCs in India offer various types of loans in the umbrella category of mortgage loan:
1. Home Loan:
This is a popular mortgage loan given in India also known as the housing loan. People get a home loan to purchase, re-decorate and re-build the house. This loan can be taken to purchase land to build a house, to build a house on a land purchased, to buy an under construction property or even for a ready to move in or old property. The tenure for home loan goes as high as 30 years where as interest rate starts from 8.35%*. A borrower has to use the funds from the loan for the house only. He or she can’t use the funds from the loan for any other personal or professional needs.
2. LAP:
LAP mean loan against property. Banks and NBFCs offer LAP for commercial as well as residential property. The loan borrower has to mortgage his or her property in order to get funds. The original documents of the property are kept with the lender until the loan is paid off in full. The repayment of the loan is done in EMIs. The interest rate for LAP starts from 10.99%* and tenure ranges for 5 to 7 years. The borrower can use the funds from this loan for any personal or professional needs.
3. Commercial Purchase:
Commercial purchase loans are taken by businessmen and entrepreneurs to buy a commercial property. Be it a shop, office space or a whole commercial complex, this loan is perfect for such purchases. Banks and NBFCs offer a commercial purchase loan at attractive interest rate which starts from 9.50%*. The funds from this loan are supposed to use to buy the property only.
4. Lease Rental Discounting:
Many people own residential or commercial properties and then give it on lease. They can get a mortgage loan against the leased properties which is known as ‘lease rental discounting’. The amount of monthly rent is converted into EMI and the loan is given on that basis. The loan tenure and the loan amount depend on the time frame as to till when the property will be kept as lease. For this the lease agreement is referred by the bank or the NBFCs who is giving the loan.
5. Second Mortgage Loan:
Banks and NBFCs offer this loan on the property which is already under loan and mortgaged. For example, imagine that a borrower has purchased a property for Rs. 30 lack by taking a loan from an ‘X Bank’ in 2010. In 2015 the borrower requires additional loan for his or her personal needs. Here the borrower applies to the bank for a second mortgage loan or also known as top up loan on home loan. The bank or NBFC give the borrower required loan on the basis of his or her credit score and previous home loan repayment history. The borrower has to pay the amount of second mortgage loan along with the first mortgage home loan or by opting for additional tenure.
6. Reverse Mortgage:
This is a new type of mortgage loan introduced by government of India in 2007-08 yearly Union budget. This is a special loan for senior citizens. Many senior citizens in India do not have a steady or adequate monthly income. But they do own a piece of property. So here they can opt for reverse mortgage which is exactly opposite of mortgage loans. They can keep their property as mortgage to the bank or NBFC and the lender pays them a regular amount every month like EMIs. The lender sells the property upon the death of those senior citizens. The loan amount paid to them is deducted from the amount in which the property is sold. The remaining amount is given to the legal heirs of those senior citizens.
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