Are you in need of a large sum of money for an emergency or for other commitments but do not have sufficient funds? If you are looking for easy financing options, availing a mortgage loan can be a good option.

What Are Mortgage Loans?

Mortgage loans are secured loans where you can borrow funds from a bank or financial institution against collateral. In mortgage loans, you get a loan by pledging collateral that can be any immovable asset like a house or a commercial property. Your asset remains with the lender until you repay the loan amount.

Mortgage Loans

There are different types of mortgage loans you can opt for:

Types of Mortgage Loans

Simple Mortgage

This is the basic type of mortgage loan, which is most commonly availed by borrowers in India. In a simple mortgage, the lender provides you funds when you pledge an immovable property as collateral. In this type of loan, a borrower promises the lender to repay the loan in the stipulated tenure and undertakes the  guarantee for it. In a simple mortgage, the possession of the property is not transferred to the lender, but they have the right to sell off the property if the borrower fails to repay the loan.

Usufructuary Mortgage

When it comes to a usufructuary mortgage, the borrower transfers the possession of the property to the lender. The lender has the right to receive the rent and profits from the property, which is adjusted against the principal and interest amount of the loan.

Adjustable-rate Mortgage loan

In an adjustable mortgage loan, the interest rate of the loan is fixed for the initial years, but thereafter, it changes according to the state of the economy and market rates. In such type of mortgage loans, banks could charge a higher fee and might have stricter eligibility criteriafor the borrowers.

English Mortgage

In this type of mortgage, the borrower agrees to transfer the ownership of the property and is personally bound to repay the loan amount on the stipulated day. In this mortgage type, the property is transferred in the name of the lender or the mortgagee. However, once the borrower repays the loan amount, the lender transfers back the property to the borrower.

Mortgage by conditional sale is a similar type of mortgage loan, where the borrower sells his property to the lender against a loan. However, this sale is applicable only if the borrower fails to repay the loan. If he/she repays the loan, the sale transaction is termed void.

Mortgage by title deed deposit

It is called an equitable mortgage. In this mortgage, the borrower deposits the title deed of the property with the lender against which the borrower can avail the loan. Under the Transfer of Property Act, 1882, this type of mortgage is similar to a simple mortgage and does not need any registration.

Anomalous Mortgage

A mortgage that does not fall in any of the above-mentioned categories of mortgage loans is called an anomalous mortgage.

While taking a mortgage loan, make sure you are aware of the type of loan you are availing. It is crucial to know the nuances of the product, and its terms and conditions so that you do not face any unpleasant surprise in the future.