What is a Mortgage - Overview, Types, and How to Apply

• A mortgage is a secured arrangement where property is offered as collateral for a loan
• The borrower generally retains possession of the mortgaged property during the repayment period
• Principal, interest, tenure and EMI are key components of a mortgage
• Before approval, the lender assesses the borrower's eligibility, credit profile, income, and property value
• Timely repayment can help maintain a healthy credit history

A mortgage is a legal transaction where an interest in a specific immovable property is transferred as security for repayment of money advanced or to be advanced, an existing or future debt, or an obligation that may result in financial liability.

For example, if a person takes a loan by offering a house as security, the property may be mortgaged in favour of the lender. The borrower remains responsible for repaying the loan according to the agreed terms.

Under the Transfer of Property Act, 1882, the person who creates the mortgage is called the mortgagor, while the person in whose favour the mortgage is created is called the mortgagee.

A mortgage works by using an interest in a property as security for a loan or other financial obligation. The borrower agrees to repay the amount according to the loan terms, while the lender receives a security interest in the property. If the borrower fulfils the repayment obligations, the mortgage is released. If the borrower defaults, the lender may have legal rights to enforce the security, subject to the applicable agreement and law.

The mortgage process generally involves the following steps:

1. Loan agreement
   The borrower and lender agree on key terms such as the loan amount, interest rate, repayment schedule, tenure, applicable charges and conditions for default.
2. Property as security
   The borrower offers an eligible property as security for the borrowing. The mortgage creates an interest in the property in favour of the lender, while the borrower's rights over the property remain subject to the mortgage terms.
3. Loan disbursal and repayment
   Once the required legal, technical and financial checks are completed, the loan may be disbursed. The borrower then makes repayments towards the outstanding principal, interest and applicable charges as agreed.
4. Default and enforcement
   If the borrower fails to meet the repayment obligations, the loan may be treated as being in default. Depending on the mortgage, loan agreement and applicable law, the lender may take steps to enforce its security and recover the outstanding amount. A mortgage does not automatically mean that the lender can simply take ownership of the property.
5. Repayment and release of mortgage
   After the borrower fulfils the secured obligation, the mortgage can be redeemed or released according to the applicable process. The borrower should obtain the relevant closure documents and ensure that the lender's security interest is appropriately released.

The Transfer of Property Act, 1882 recognises different types of mortgages. These include simple mortgage, mortgage by conditional sale, usufructuary mortgage, English mortgage, mortgage by deposit of title deeds and anomalous mortgage.

A mortgage consists of several key components that define the borrowing arrangement and the security provided to the lender. Under the Transfer of Property Act, 1882, a mortgage involves an interest in specific immovable property being used to secure repayment of money or another financial obligation. 

• Principal amount: The amount borrowed by the borrower
• Interest rate: The cost charged by the lender for providing the loan
• Tenure: The period over which the borrower is expected to repay the loan
• Repayment schedule: Specifies the frequency and amount of repayments
• Collateral: The property offered as security for the borrowing
• Mortgagor: The person who provides the property as security
• Mortgagee: The lender or person in whose favour the mortgage is created
• Mortgage deed: The legal document recording the mortgage terms, where applicable
• Redemption: The process of releasing the mortgage after the secured obligation is fulfilled

Bajaj Finance offers a mortgage loan in the form of a loan against property, where an eligible residential or commercial property is mortgaged as security against the loan. Borrowers can use the funds for various personal or business-related financial requirements, subject to the applicable terms. The loan amount can go up to Rs. 15.50 crore, depending on factors such as property value, income and repayment capacity.

Features and benefits of loan against property

• Loan amount of up to Rs. 15.50 crore* -Manage your urgent financial needs with a sizeable loan amount of up to Rs. 15.50 crore sanctioned based on your mortgaged property.
• Low interest rates - Our loan against property comes with affordable interest rates starting from 7.5% to 14.25% (fixed or floating rate of interest) p.a.
• Disbursal in 72 hours* - Get money in your bank account within 72 hours*- of the approval & subject to receipt of all applicable documents and basis risk policy.
• Tenure of up to 15 years* - You can repay your loan amount conveniently with a repayment tenure ranging up to 15 years.
• Multiple end-use options - With no end-use restrictions, use the loan amount for an emergency or pay for wedding expenses, higher education or business expansion.

Whether you’re expanding your business or funding your child’s education, Bajaj Finance Loan Against Property can help you meet your financial needs while continuing to use your property. Get a loan of up to Rs. 15.50 Crore* against your property, with disbursal within 72 hours of approval, subject to applicable terms and conditions.

Follow these steps to apply for a mortgage loan by Bajaj Finance:

1. Enter your personal details
   Provide your basic personal information to begin the application.
2. Provide property details
   Enter the required details about the property you plan to offer as security.
3. Check your eligibility
   Check your eligibility in a few seconds without impacting your credit score.
4. Review your loan offer
   Review the loan amount, interest rate, tenure and other offer details. If everything looks suitable, proceed with the application.

Below is the eligibility criteria for a mortgage loan by Bajaj Finance:

A mortgage is a legal arrangement that uses an interest in immovable property as security for a loan, debt or other financial obligation. It is different from an outright sale because its primary purpose is to secure repayment. Understanding the type of mortgage, repayment obligations, documentation, default provisions and right of redemption can help borrowers make informed property-financing decisions.

*Terms and conditions apply.