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Types Of Mortgage Loans Available

By Author: Aishwarya Mahurkar
Total Articles: 291

Mortgage loans are the type of loans in which the individual is required to put in their property as security. The word mortgage means a legal agreement in which a financial institution lends money in exchange for the borrower’s title for their property until the loan has been repaid. There are three main types of mortgage loans that financial institutions offer their customers:

Loan against property

This type of a mortgage loan is ideal for individuals to need a source of finance. One can simply use their own property as security to gain a loan from the financial institution. This type of a loan can be used for a variety of purposes namely paying for your child’s education abroad or wedding, planning an international holiday or even financing a new business. A loan against property is a better option as compared to a personal loan as it is more affordable. Since security is provided financial institutions tend to charge a lower rate of interest.

Purchase of commercial property

This type of a loan is offered to customers to purchase a ready or under construction commercial property. Financial institutions offer this loan to salaried, self employed professionals and non professionals. The tenure of this loan is a maximum of 15 years. The loan amount one can avail is from 15 lakhs to 10 crores. Financial institutions look at a number of factors when considering an individual’s eligibility for the loan. The factors considered are the property value, assets and liabilities, repayment capacity and age.

Lease rental discounting

This type of a loan enables one to encash their current rental cash flows to avail a long term loan from the financial institution. This type of loan has been specifically designed for businesses. The loan offered can be used to expand their business or business capital requirements. Depending on the lease agreement, the tenure of the loan will be decided. A business can avail such a loan for an amount between 15 lakhs and 10 crores. The factors looked at by a financial institution when considering a loan application are their property’s value, their repayment capacity, assets and liabilities as well as age.

The different types of mortgage loans were divided by the financial institution to meet the different requirements of the loan applicants both individuals as well as customers. While loan against property can be used by individuals to meet their financial requirements, purchase of commercial property and lease renting discounting can be applied for by businesses for their different finance requirements. Property is an asset which can be taken advantage of to get more affordable loans from financial institutions.

Author Bio :

The author is a seasoned writer on finance topics and she articulates aspects that are important to people availing the SME loan in India facility. She writes about a variety of topics covering the home loan documents, rates & mortgage loans that help to make the best decision.

Total Views: 23Word Count: 484See All articles From Author

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