Banks and non-banking financial companies such as Bajaj Finserv offer attractive loans with the best possible rate of interest and terms for personal, business, home loans and mortgage loans.
For a home loan, an applicant borrows money from a bank or a non-banking financial company on interest rate, for upgrading, constructing, or buying a property in a residential real estate.
While the lender provides the loan, they consider the home or the property as the collateral for the loan amount. If the borrower defaults on payment or does not pay, the bank has the right to liquidate the property and recover their loan amount.
Additional Reads: Know about Different Types of Home Loans
People mostly avail home loans for buying a house or a flat. However, they may also avail home loans for buying a plot of land for constructing their house. Other reasons for taking a home loan may be for extending, renovating, or repairing their existing flat or house. Applicants for home loans have to pay back at adjustable or fixed interest rates and other payment terms set by the bank or non-banking financial company.
For a mortgage loan, the property of the applicant serves as the collateral. Banks and non-banking financial companies provide the loan or mortgage by securing the property or real estate. Therefore, although the borrower maintains his possession or the home or the property, the lender is the actual owner, until the borrower has paid off the loan completely.
Banks and non-banking financial companies offer several types of mortgage loans:
i.I. Fixed Rate Mortgage: In this type of loan, the bank keeps the interest rate fixed for the entire tenure of the loan.
i.II. Adjustable Rate Mortgage: In this type of loan, the bank keeps the interest rate fixed for a specific period, and after that period, they adjust if periodically according to market fluctuations.