What is a mortgage loan?

2 min

mortgage loan is a secured loan that allows you to avail funds by providing an immovable asset, such as a house or commercial property, as collateral to the lender. The lender keeps the asset until you repay the loan.

This is a popular form of financing as it helps you avail a substantial loan amount at a competitive mortgage loan interest rate and repay over a lengthy tenor.

3 Major Mortgage Loan Types in India

Listed below are the three types of mortgage loans that are available to you.

  • Home loans
  • Commercial property loans
  • Loans against property

You may avail a home loan or a commercial property loan only to purchase a home or a commercial space, respectively. On the other hand, a loan against property has no end-use restrictions. Use it to fund your child’s overseas education, a wedding, home renovation, medical treatment, or more. You can avail the fastest loan against property from Bajaj Finserv with the money in your account within 3 days* of approval.

*Conditions apply

Also read: How mortgage loan influences your CIBIL score?

What is the mortgage loan process?

The mortgage loan process, often known as a home loan process in India, is composed of a series of steps taken by a borrower to acquire a loan. It starts with the loan application, followed by the submission of the necessary documents. This ranges from identity proof and residence proof to income evidence and property papers. Upon successful verification of these details, an initial loan appraisal is carried out. The loan sanction comes after successful appraisal and thorough scrutinising of the legalities linked to the property. The final step includes the loan disbursement, where the agreed loan amount is transferred to the borrower or directly to the seller or builder.

How is a Mortgage Loan different from Loan Against Property?

When looking at a mortgage loan and a loan against property (LAP), it is essential to understand the differences between the two. A mortgage loan, typically known as a home loan in India, is a loan taken out to purchase a property or land. The bought property itself acts as a security until the loan is fully repaid. On the other hand, a Loan Against Property is where you mortgage your pre-owned property to get a loan. The purpose of this loan could be anything, such as financing a business, acquiring another property or even supporting education or marriage expenses. The primary difference lies in the purpose of the loan and the ownership status of the property at the time of availing the loan. In a mortgage loan, the property is being bought with the loan, whereas in a LAP, you are leveraging your existing property to get a loan for different needs.

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Mortgage FAQs

What is Mortgage?

Mortgage refers to the act of providing a collateral or security, against which a lender may sanction a loan to you. In the case of a mortgage loan, typically a property asset is pledged as collateral so you can receive the loan you desire as a secured loan. The property stays collateral or guarantee, till the borrower pays back the full loan amount to the lender.

What is a mortgage example?

Mortgage means pledging a piece of land, a home, or any other type of property to get a loan. If you fail to repay the loan in the agreed period, the lender has the right to take your property. Loan Against Property is the most common example of a mortgage loan.

What is the meaning of mortgage vs home loan?

Mortgage means pledging an asset to get a loan. If you need a loan to finance your education, medical bills, or a wedding, you can take a loan by mortgaging your home or land. A home loan is a type of mortgage loan is granted to buy a home only.

What does a mortgage loan mean?

A mortgage loan, known as a home loan in India, is a type of loan where you borrow funds from a financial institution to purchase a house or a piece of real estate. The purchased property itself serves as collateral for the loan. This means if you fail to repay the loan, the financial institution has the right to take ownership of your property.

What is a Farm Loan Mortgage?

A farm loan mortgage is a particular type of loan used to buy agricultural land or improve existing farm operations. These loans are provided by banks, NBFCs, or specialised farm lending institutions. The property being purchased or the property being improved serves as the security against the loan.

What is a Reverse Mortgage Loan meaning?

A reverse mortgage loan is a special type of financial service for senior citizens aged 60 or above, in which homeowners can convert a part of the equity in their homes into cash. The money can be availed as a lump sum, regular monthly cash flow, or a line of credit according to the borrower's needs.

How is a Mortgage Loan different from Loan Against Property?

A mortgage loan, commonly referred to as a home loan in India, is taken out to buy a property or land. The bought property acts as security until the loan gets fully repaid. In contrast, a loan against property (LAP) is a type of financing where you mortgage an already owned property as collateral for obtaining the loan. The purpose of this loan could be personal or business needs. The major difference between the two is the purpose of the loan and ownership status of the property at the time of taking the loan.

What's the difference between a home loan and a mortgage?

In the Indian context, the terms "home loan" and "mortgage loan" are often used interchangeably. However, technically, a home loan is the money borrowed to buy a home or property, while a mortgage refers to the legal contract that obligates you to repay the loan amount to the lender.

What are the benefits of a mortgage loan?

Mortgage loans come with several benefits. Firstly, they help you buy your own house without the need for immediate full payment. Secondly, mortgage repayments build equity in your home, which can be beneficial in the long run. Thirdly, they often come with lower interest rates as the loan is secured against the property. Lastly, interest paid on a home loan is eligible for tax deductions under the Indian Income Tax Act.

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