Mortgage loans in India recorded a year-on-year growth rate of 18% for FY 2018. The first quarter of 2019 also maintained this rate with growth recorded at 17% to 19%, thus making mortgage loans a significant contributor to the economy’s overall debt financing. The popularity further gains leverage as financial institutions bring these loans against several types of mortgage property.
What are Mortgage Loans?
The term ‘mortgage’ implies an immovable property’s transfer of interest to secure funding as loans and advances. Lenders offer such loans against different types of mortgaged property to help fulfil large scale funding requirements of individuals.
Financial institutions decide on the loan amount to be sanctioned based on two primary parameters.
- The current market value of the mortgaged property, which is computed as per the age of property, its location, available amenities and other factors.
- Their policies regarding the LTV (Loan to Value ratio). It is computed as a percentage of loan amount they are ready to offer against the property’s market value. With the best lenders, you can avail mortgage loans like loan against property at a high LTV of up to 75%.
Characteristics of a Property Loan –
Available against different types of mortgage property, these loans also carry a few essential characteristics unique to them.
- The loan can be obtained only against the mortgage of immovable properties.
- It comes with a fixed tenor of repayment within which the borrower has to repay the loan along with interest accrued.
- It results in mortgaged property’s transfer of interest. However, the property’s ownership remains with the borrower.
- Availing the loan does not transfer the property’s possession to the lender, but only acts as a transfer of interest for the loan tenor. The borrower, however, cannot sell the property unless the loan is repaid along with any other charges accruing.
- The mortgager can regain the transfer of interest after repaying the loan along with interest due.
- If the borrower fails to repay the loan, the lender acquires a right to recover it by way of proceeds obtained through mortgaged property’s auction.
Types of Mortgaged Property Lenders Accept:
Depending on the respective policies, a lender can provide these loans against several types of mortgage property listed below.
- Commercial Property
You can avail secured loans like loan against property by mortgaging the following commercial properties.
- Vacant commercial property whose ownership is undisputed
- Commercial property rented out to a tenant
- Residential Property
You can provide the following residential properties as collateral to avail the loan.
- A self-occupied residential property
- A vacant property whose ownership remains undisputed
- A rented residential property
You can avail mortgage loans at the lowest interest rates if the collateral provided is a residential property. It makes availing loan against a residential property more affordable, thus allowing you to repay your existing loan effectively.
- Shared Property
Properties that are shared or have multiple owners can also be used as collateral to avail mortgage loans. Lenders, nevertheless, allow property with multiple owners as security if the owners are family members sharing relations listed below.
- Son and father
- Son and mother
- Unmarried daughter and parents
Financial institutions bring these secured loans against various types of mortgage property for both salaried and self-employed individuals who meet the necessary eligibility criteria.
Lenders like Bajaj Finserv also offer these loans of up to Rs. 3.5 Crore along with other attractive features like hassle-free approval, Flexi Loan facility, balance transfer facility and more.
They also ease the process of availing finance and save valuable time through their pre-approved offers. All you need to do is provide a few essential details like your name and contact number to check your pre-approved offer. These offers are available on business loans, personal loans and home loans, along with several other financial products.
Make sure to match your eligibility with the lender’s requirements before applying to improve your chances of loan approval. Also, know the charges on your LAP and other mortgage loans to plan for better financial planning.