A Mortgage Loan or loan against property is a type of loan taken against an asset. This type of loan is offered by different housing finance companies. This loan comes in use in case you don’t have enough funds. Occasions like marriage are a big monetary responsibility; a Mortgage Loan or a loan against property is a handy option. Let’s deep dive into Mortgage Loans below.
Why Mortgage Loans?
A Mortgage Loan is a secured loan offered against immovable assets like a house, a shop or a piece of land. The immovable asset is provided to the lender as collateral. They evaluate the value of the property and approve the loan. Like any other loan, a Mortgage Loan will have a principal amount and an interest charge. Throughout the repayment tenure of a loan taken against property, the borrower will pay the EMIs. Every EMI will consist of some part of the principal loan amount and the interest charge. Since a Mortgage Loan is a secured type of loan, individuals can get it with an affordable interest rate.
In this loan, the property is used as collateral, so the original deeds and papers will remain with the lender. If the loan applicant fails to return the Mortgage Loan amount, the lender has the right to sell the collateral to cover the loan costs. However, if the borrower repays the entire loan taken against the property, the lender returns the deeds.
Mortgage Loan and Housing Loans
You can take a Mortgage Loan using your personal property. There is no compulsion on how the property was used before taking a loan. You can use the loan amount for any purpose, like marriage, education, or big-ticket purchases. Whereas, a Housing Loan has the sole purpose of using the approved funds for property purchase. Check out the Dissimilarity between the two below:
| Factors | Housing Loan | Mortgage Loan |
| Usage | A Housing Loan can only be used for purchasing or constructing a new house. | A Mortgage Loan can be used for various purposes based on the borrower’s needs |
| Property Value | You can get up to 90% of the property’s value as a Housing Loan | A Mortgage Loan only offers 65 – 70% of the property’s market value |
| Rate of Interest | Housing Loan interest is comparatively lower. | The Mortgage Loan interest is a little higher |
| Repayment Tenure | The maximum repayment tenure for a Housing Loan is higher than that of a Mortgage Loan. | The maximum repayment tenure for a Mortgage Loan is less than that of a house loan. |
Final Words
A Mortgage Loan is a helpful financial support. With a wide range of options available, it is essential to carefully consider your needs and choose the Mortgage Loan option that is best for you. Apply for a Mortgage Loan with a lender that offers affordable Mortgage Loan interest rates, flexible tenure options and higher loan limits. These three are the basis of a Mortgage Loan that you should consider while applying for one. A good loan limit helps you plan out your expenses and an affordable rate helps you in the repayment.
So for your effective financial planning, do consider a Mortgage Loan. However, it is important to read the terms and conditions of the loan provider. The conditions include the interest rate, repayment and associated fees detailed overview. Assessing all these ensure that the Mortgage Loan will be sustainable for you over the long term.
While shopping around and comparing rates and terms from different lenders it is advisable to know what a Mortgage Loan is. This way, you have a rough guide and it will help you through the process to make an informed decision.
Ultimately, this loan helps individuals achieve their financial goals, but it is important to approach the process with care and caution for successful approval from the lender.
Also Read: Learn 5 factors that decide your personal loan eligibility
