What Is Mortgage Loan Its Characteristics And Types
Finance 347

What Is Mortgage Loan Its Characteristics And Types

What Is Mortgage Loan Its Characteristics And Types

Mortgage Loan

A mortgage loan is a debt instrument where the immovable property of the buyer secures the loan. Under the Mortgage loan, the borrower gets the credit from the bank or financial institution by pledging the property until he pays back the loan and interest amount. A mortgage loan is also known as a lien against property or claim against the property.

Features of Mortgage loan

Secured loan

A mortgage loan is the secured loan where the immovable property of the borrowers guarantees the loan amount under the mortgage. In case of defaults in payback the credit, the lender has the authority to sell the immovable property and recover the dues. The loan must be secured against immovable property like land and only those machinery that cannot be shifted from one place to another.

Rate of interest

The rate of interest is usually lower in the mortgage loan as the lender has greater confidence in the borrower due to the secured nature of the loan. The interest rate lies between 8% to 13%, which is way lower than the interest charged on the personal loan, i.e. starts from 14%.

Documents required

Identity proof

  •  Aadhaar card, PAN Card, Voter’s ID, Passport, Driving license, etc.

Proof of Residence

  •  Aadhaar Card, Electricity Bill, Ration’s Card, Passport, Driving License etc.

Proof of Income

  •  Salary slip, Form 16, Bank statements of the last six months, Profit and loss statements etc

Signature proof

  • Photograph
  • Proof of the documents of the property to be mortgaged
  • Repayment tenure under the mortgage loan is upto 15 years.
  • The loan provided is generally 70% to 90% of the value of the property mortgaged.

Types of Mortgage Loan

Simple Mortgage

A simple mortgage is the mortgage loan in which the borrower mortgages the immovable asset to avail a loan. The lender has the right to sell mortgaged property in case of non- payment the amount, but he must attain the decree from the court in case of the sale of the mortgaged property.

Usufructuary Mortgage

UnderUsufructuary mortgage, the borrower transfers the property’s possession until payment of the loan. The lender can use the property, and he is allowed to receive rents or profits in lieu of the interest or principal or both.

English Mortgage

Under the English Mortgage, personal liability on the borrower is established. The mortgaged property is transferred to the lender in case of default in the repayment. If the borrower paybacks the loan successfully, then he is liable to get back the possession and ownership of the property.

mortgage By Conditional Sale

 Under the Mortgage By Conditional Sale default of payment of the mortgage money on a specific date may lead to a sale. However, on such payment being made, the sale shall become void.

Mortgage By Title Deed Deposit

Under the Mortgage By Title Deed Deposit, the borrower deposits the title deed to create a security thereon with the lender.

5 Things To Consider While Prepaying Your Loan Against Property

Anomalous Mortgage

All those mortgage loans which are not Simple Mortgage, Mortgage By Title Deed Deposit, Mortgage By Conditional Sale, English Mortgage and Usufructuary Mortgage are termed as anomalous mortgage loans.

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Finance 347