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Any form of financial support that concerns putting the property up for mortgage to banks or concerned financial institutions, including HFCs and NBFCs, qualifies as a mortgage loan. However, it is intriguing to note that different types of mortgage loans are up for grabs, depending on individual preferences, property valuation, age factor, commercial inclinations, and sudden cash crunches.
To simplify things further, you can identify six types of mortgage loans with each having a specific financial utility. Not to mention, being a secured loan, mortgage loan interest rates are comparatively lower than personal or business loans.
Before we move ahead and discuss each of the six mortgage loan models, as per your financial inclinations, we must stress upon the utility of the concept in general. To be exact, a mortgage loan is probably the most lucrative financial instrument to rely on if you require a larger sum, payable over a longer tenure, and as per affordable repayment structures.
- LAP
Loan against property concerns mortgaging an existing property or establishment in exchange for a credit line. While the interest rates are on the lower side, the likes of PNB housing finance mortgage India plans and other reliable financial services even offer up to 60 percent of the property value as the loan amount. Therefore, if you require a decent chunk of cash for emergencies, nothing works better than a LAP.
- Home Loan
Taking a loan for buying or constructing a new residential property is yet another form of a mortgage loan. The concerned credit line is easy to get approved for and depends on your credit score, financial stead, and existing set of documents.
- Commercial Loan
Mortgage loans for purchasing commercial properties also qualify to be on this list. Besides, financial institutions offer pretty competitive mortgage loan interest rates to simplify repayments.
- LRD
Better termed as Lease rental discounting, this form of mortgage loan is usually taken against leased commercial and residential properties. The loan procured by the landlords is calculated and adjusted against the EMIs, whereas the one-time loan amount helps them mitigate any financial crisis with ease.
- Second Mortgage
This is more of a top-up loan and is deemed as an extension to the LAPs. The process works when after a certain point of time, the concerned lender requires another line of credit as a loan against the already mortgaged property. The bank or NBFC makes indicative calculations and approves the same, based on the repayment history of the first loan and even the credit profile.
- Reverse Mortgage
Senior citizens without a pension scheme often require a steady source of income. A reverse mortgage comes in handy for them and ensures that they get a steady monthly remuneration by mortgaging the property to the financial institution. The property is sold by the lender once the senior citizen expires. However, only the remitted loan amount is dedicated to the sale value, and the rest is forward to the legal heir.
Each of these mortgage loans solves a certain form of financial inadequacy. Although it is easy to get approved for a mortgage loan due to the secured nature of the same, the final decision is at the bank’s or NBFC’s discretion and depends on the credit profile.
