A mortgage loan has been one of the most preferred financing options lately. Here the property itself is kept as collateral for the loan. Usually, an individual takes this loan to extend their existing property or purchase other real estate properties, a piece of land or a new home.
Now, there are various types of mortgage loans available in the market. Borrowers can choose one as per their requirements. There are mainly six types of mortgage loans available. Here is a basic overview of each of its types.
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Below are the major 6 kinds of mortgage loans that individuals can opt for:
It is one of those mortgage loans that are commonly taken against leased properties. Here the borrowers take the loan against leasing their own commercial or residential properties. In this case, the monthly rent amount is converted into EMIs; the loan amount is provided to the borrower on the basis of this amount.
Another distinct feature of this mortgage loan is that here the loan amount and the tenor depend upon the duration till which the property is being kept leased.
In India, a loan against property is one of the most common types of mortgage loans available. It is offered against both residential and commercial properties and can be used for any purpose.
Here, the borrowers mortgage their properties with the lenders and receive loans at a certain percentage of the properties’ current market value. Also, the original documents of the properties are to be kept by the lenders until the loan amount is repaid back. The usual tenor of repaying these loans is up to 15 years but it will vary. One can also avail various tax benefits on loan against property that can help to reduce the overall tax liability.
Commercial purchase is the most appropriate loan for buying commercial properties. Businessmen and entrepreneurs generally take this loan for purchasing commercial properties like any office space, shop or commercial complex, etc. The interest rates offered by different financial institutions for this loan vary.
These types of mortgage loans are introduced especially for senior citizens who own real estate but do not possess any steady form of income on a monthly basis. This works reversely in the form that here although the property is mortgaged with the lender, it pays a certain sum as EMI to the borrowers every month. The lender also has the right to sell the property when the borrower deceased.
This is a sort of additional loan taken by the borrower on the same property that is already under a loan. The lender agrees to this loan depending upon the borrower’s loan repayment history and credit score.
This is another popular mortgage loan taken by the borrower for purchasing a house or for construction or renovation purposes. Home loans differ from that of property loans in a way that here the funds should be used for only house buying or construction purposes and not for any other business or personal purpose.
Here are some things that an individual should know before applying for mortgage loans:
To be on the safe side, one can also calculate the EMIs that the individual has to pay using a mortgage loan calculator. This will provide the borrowers with an estimated amount that they need to pay every month to conveniently repay the loan.
There are many reputed financial institutions that offer pre-approved offers to their customers. These offers make the loan-availing process simpler. Individuals can check their pre-approved offers simply by entering their names and contact details. These offers are available on various financial products like home loans and many others.
Taking a mortgage loan is a long-term financial commitment. One must check out the different types of mortgages available so that the borrower can make a wise decision by selecting the one that best suits the financial situation, requirements, and planning.
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