Mortgage loan is also called loan against property (LAP) or property loan. In this, banks, HFCs or NBFCs give loan by keeping the applicant's property as collateral.
The customer can take a mortgage loan from the bank and use it for buying property, higher education of children, business expansion, contingency expenses etc. Mortgage loan is also known by many other names such as loan against property or property loan etc.
What is Mortgage loan
In this, any person mortgages his property (house, car, shop, land, gold - silver etc.) to a financial institution (bank or NBFC) and takes some amount as a loan on it. After paying the loan amount, the person takes back his property.
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How many types of Mortgage
Simple Mortgage
In this type of loan, the borrower pledges his entire property to secure the loan. And if the borrower fails to repay the loan, the bank or NBFC can sell the property.
Conditional mortgage
In this, the customer enters into an agreement with the bank. If the customer fails to make the payment or defaults, the terms become applicable. However, they have no value if the customer successfully makes the payment
Ownership exchange
In this type of loan, the asset concerned is transferred to the lender and they receive any rent or profits. This does not create any personal liability for the borrower.
Title deed mortgage
In this type of loan, the borrower submits the title deeds to obtain a loan against it.
Lender’s liability
In this type of loan, there is personal liability on the borrower. The asset is transferred to the lender with the condition that it will be returned after the repayment is complete.
Usufructuary mortgage
As per the Act, in a usufructuary mortgage, the customer gives possession of the mortgaged property to the bank. The bank gets the right to retain possession of the property until the mortgage amount is repaid. On the other hand, the title deed of the property remains with the borrower
english mortgage
In a mortgage, a person takes some amount as a loan by pledging his property. Until the loan amount is repaid, the property will remain mortgaged. In a mortgage, the property will always remain immovable.
Anomalous Mortgage
In this type of mortgage, the person accepts a condition beforehand. It stipulates that if the amount is not paid, the property will be sold. For example, if you pay the amount by that date, the sale will be void.
fixed rate mortgage loan
Fixed rate mortgages are usually fixed for one to five years. During this time, the interest rate on the home loan remains constant despite market fluctuations. The borrower knows in advance how much he will pay each month.
Subprime or sub mortgage loan
A subprime mortgage is a type of home loan made to people who have a poor, incomplete, or no credit history. Because such borrowers are a higher risk to lenders, subprime mortgages generally charge higher interest rates than standard (prime) mortgages.
Mortgage loan interest rates
The interest rates of mortgage loan are decided on the basis of its secured nature, along with this it is also possible that the interest rates of mortgage loan may vary from one bank to another. Generally the interest rates of mortgage loan range from 8.50 % to 11.95 % p.a.
- State Bank of India 10.15%
- Bank of Baroda 10.85% to 15.75%
- Bank of Maharashtra 10.95% to 11.45%
- Punjab National Bank 9.80%
- Union Bank of India 9.80%
- Oriental Bank of Commerce 10.95%
- Karur Vysya Bank 10.00%
- Corporation Bank 10.85%
- Kotak Mahindra Bank 9.15%
- IDFC first Bank 9% to 20%
- Federal Bank 10.10%
- Indian Overseas Bank 9.80%
- IDBI Bank 9.50% to 11.70%
- Indusind Bank 8.75% to 14.58%
- Bank of India 11.25%
- Bandhan Bank 12.64% to 17.22%
- RBL Bank 11.50%
- Canara Bank 10.30% to 12.80%
- HDFC Bank 9.50% to 11%
- ICICI Bank 10.85% to 12.50%
- Axis Bank 10.50% to 11%
- Jammu and Kashmir bank 9.10%
Mortgage loan eligibility
For a mortgage loan, different financial institutions have different eligibility criteria. Some of the most common criteria are listed below.
- You are a resident of India
- Your age should be minimum 25 years and maximum 75 years
- If you are self-employed, you should be in the same business for at least three years
Mortgage loan documents
For salary person
- Updated address proof (see KYC documents)
- Age proof (see KYC documents)
- Salary slip for the last 3 months
- Latest PF statement
- Form 16 issued by your employer
- Copy of ITR filed for the last three years
- Photocopy of investments
- Photocopy of life insurance policies
- Bank passbook copy of all bank accounts showing entries for the last 6 months
- Copy of sanction letter in case of other loans taken (active and closed)
- Updated repayment track
- No outstanding in case of closed loans
- Photocopy of your credit card with last monthly statement
- Salary certificate on employer’s letterhead duly stamped and signed, if you do not have a regular salary slip
- Visiting card
- Copy of rent agreement if current accommodation is on rent
For business and self employed people
- Loan application form with fresh photograph
- Check applicable processing fee
- Customer relationship form with fresh photograph
- Photo ID proof (see KYC documents)
- Proof of address (see KYC documents)
- Age proof (see KYC documents)
- Copy of audited/certified accounts along with schedules for the last three financial years
- Copy of ITR filed for the last three years
- Business note in Bandhan Bank format with photographs of the business place
- Photocopy of investments
- Photocopy of life insurance policies
- Bank passbook copy of all bank accounts showing entries for the last 6 months
- Copy of sanction letter in case of other loans taken (on and off)
- Updated repayment track
- No outstanding in case of closed loans
- Photocopy of your credit card with last monthly statement
- Rent agreement if your business place is on rent
- Shops and establishments for your commercial unit License
- Copy of your professional degree/qualification certificate
- Partnership deed/shareholding pattern of your unit
- Visiting card
- Copy of rent agreement if current accommodation is on rent
Some additional documents that may be required
- Approved plan with estimate and layout plan and building permission for construction
- Copy of Sale Deed/ Sale Agreement/ Construction Contract/ Facility Agreement
- Copy of ownership documents of previous owner(s)
- Proof of ownership in revenue records viz. Property Card, Form 7/1 2, Form 8-A, Form 6 etc.
- In case of Co-operative Society, copy of share certificate and allotment letter
- Latest photographs of the property
- Receipts of margin money payment
- NA permission from the concerned authority
- NOC for mortgage from the concerned authority like Society, Development Authority etc.
How much loan can be given on mortgage?
The amount you get can be anywhere between 20 lakhs and 8 crores, depending on the market value of your property and other eligibility factors. So the amount of sbi mortgage loan can fund up to 75% of the total cost of the property.
The value of different forms of property varies. Commercial property is usually more expensive than residential real estate. As a result, a commercial property may receive a lower interest rate, while a residential property may have a higher interest rate.