What are the types of mortgage loan?
A mortgage loan is a secured loan where a borrower pledges their property as collateral to secure funds. It has become a popular financing option due to its sizable loan amounts, relatively low interest rates, and flexible repayment tenures. In India, there are several types of mortgage loans, each catering to different needs and circumstances. These include the simple mortgage, usufructuary mortgage, English mortgage, mortgage by conditional sale, mortgage by title deed deposit, and anomalous mortgages. Each type offers distinct features and terms, and understanding these types of mortgage loans can help borrowers choose the best option based on their requirements.
Types of mortgage loan
Mortgage loans come in various types, each tailored to meet different financial needs and preferences:
Mortgage type |
Type of property |
Category |
Simple Mortgage |
Residential or Commercial Property |
Secured Loan |
Mortgage by Conditional Sale |
Residential or Commercial Property |
Secured Loan |
English Mortgage |
Residential or Commercial Property |
Secured Loan |
Fixed-Rate Mortgage |
Residential Property |
Home Loan |
Usufructuary Mortgage |
Residential or Commercial Property |
Secured Loan |
Anomalous Mortgage |
Residential or Commercial Property |
Secured Loan |
Reverse Mortgage |
Residential Property |
Loan Against Property |
How Does a Mortgage Work?
A mortgage is a long-term loan used to buy a home, with the property serving as collateral. The borrower repays the loan in installments, typically monthly, which include principal (the loan amount) and interest. Mortgage terms usually last 15 or 30 years, with interest rates being either fixed or adjustable. If the borrower fails to repay the loan, the lender can foreclose on the property. Key factors like credit score, income, and debt-to-income ratio impact the loan approval process. Over time, as the mortgage is paid down, the borrower builds equity in the home.
Also Read: Types of loan against property
Mortgage Loan Complete Process
Pre-Qualification
Estimate loan eligibility based on basic financial details.
Pre-Approval
Lender verifies income, credit, and offers a conditional loan.
Property Search
Find a home within the approved loan range.
Loan Application
Submit financial documents and apply for a mortgage.
Appraisal & Underwriting
Lender assesses the home’s value and verifies information.
Loan Approval
Final approval based on all checks and documentation.
Closing
Sign paperwork, pay closing costs, and transfer ownership.
Monthly Payments
Start making mortgage payments to repay the loan over the agreed term.
Mortgage loans by Bajaj Finance
Bajaj Finserv offers mortgage loans at competitive mortgage loan interest rates to finance your big-ticket purchases. These loans combine the best features of the various mortgage types listed above and include:
- Home loan
- Loan against commercial property
- Loan against residential property
- Land purchase loan
- Loan to purchase another commercial property
- Lease rental discounting
Check our mortgage loan eligibility requirements carefully before applying. Also, know the Mortgage Loan interest rates to plan your finances accordingly. Avail them by following simple Mortgage Loan process.
Related mortgage terms
Mortgage FAQs
The two main types of mortgage loans are:
- Simple mortgage: The lender has the right to sell the mortgaged property if there is a payment default.
- Usufructuary mortgage: The possession is transferred to the lender. The lender can receive rent or profit from it without putting a personal liability on the borrower.
Simple mortgage: In this type of mortgage, the borrower repays the loan amount in EMIs over a mutually decide tenure.
A bridge loan is a short-term loan used to "bridge" the gap between the purchase of a new property and the sale of an existing one, often with higher interest rates.
Yes, there are specialized mortgage loans for first-time homebuyers. These typically offer lower interest rates, reduced down payments, and more flexible qualification criteria to make homeownership more accessible.
A negative amortisation mortgage occurs when monthly payments are lower than the interest due, causing the loan balance to increase over time. This can result in owing more than the original loan amount.
A permanent mortgage in construction financing refers to a long-term loan that replaces a construction loan once the project is completed, providing permanent financing for the newly built property.
Prepayment penalties vary by lender and loan type. Some mortgage loans allow prepayment without penalties, while others may charge fees. Check your loan agreement for details.
Documents include identity proof, address proof, income proof, property documents, and bank statements. Requirements may vary based on the loan type, lender, and borrower’s financial profile.
Yes, many lenders offer mortgage loans specifically for purchasing land or plots. Loan terms, eligibility, and interest rates depend on the lender’s policies and property type.
