What is a mortgage loan and its types

 In life we ​​face certain situations where we cannot avoid costs. Many of those embody business enlargement, marriage, medical emergencies or education.One trick that can help you achieve this is a mortgage loan. Mortgage loans fall under the category of secured loans. The borrower pledges the property to the lender in exchange for the loan. The lender holds the mortgage until the entire loan amount, including interest, is repaid. This loan is repaid in equal monthly installments or EMIs.

What is a mortgage loan?

 A mortgage loan refers to a loan against your property. It can be your house, shop or wasteland. Mortgage loans are offered by banks and non-bank financial institutions. A lender lends you a sum of cash and charges interest on it. You repay the loan in easy installments. Your assets are collateral for your loan. It remains in the custody of the lender until you repay the loan in full. The lender has legal title to the property during the loan period. So if you fail to repay the loan, he has the right to foreclose and auction the property.

Types of mortgage loans:

There are different types of mortgage loans:

Conventional mortgage: 

 In this type of mortgage, the borrower signs an agreement that if the borrower fails to repay the loan on time, the lender can sell the mortgaged property to someone else to recover the loan.

Conditional Sale Mortgage: 

 In this type of mortgage, the lender may stipulate certain conditions that the borrower must abide by in terms of repayment of the loan. This includes delay in payment of monthly installments, increase in interest rate due to non-payment of installments and sale of property subject to various conditions. has conditions like

English Mortgage:

 In such a mortgage the borrower transfers the property to the name of the lender at the time of taking the loan, after the loan is fully repaid, the property is transferred back to the name of the borrower.

Fixed rate mortgage:

This type of guarantee is a guarantee by the lender to the borrower that the interest rate will be fixed for the duration of the loan.

Full Benefit Mortgage:

 This type of mortgage offers a concession to the lender. He can use the property or get benefits like rent or other use during the entire loan tenure. But most rights depend on the owner.

Multiple mortgages: 

This refers to the combination of different mortgages.

Reverse mortgage:

 In this the lender gives the loan on a monthly basis. The total amount is divided into installments. The lender pays the amount to the borrower in installments.

Assignment of mortgage:

 In such a mortgage, the property rights are transferred to the lender. This method is generally followed for bank mortgage loans. This is done to protect the property.

What is a mortgage agreement?

The mortgage agreement sets out the contractual terms between the bank and the borrower. After marking the borrower gets access to the funds. Such an agreement also gives the lender the right to demand the sale of the property if the borrower defaults on his loan installments.

Importance of mortgage:

Buying a house is the biggest acquire you would ever make in your life. So home loan is your biggest financial liability. You can extend the home loan repayment over several years, making your monthly installments affordable and reasonable.

When someone gets their first mortgage loan they naturally choose a longer term. But there are no proper guidelines for this. In today's environment, as we live longer and approach retirement age, a 30-year mortgage is becoming the norm. This will help lower your monthly payment. But at the same time your financial burden will last for a long time.

You can choose the shortest loan tenure that you can afford. This way you will not only get out of the mortgage quickly but also not have to pay a huge amount of interest. Also note that you cannot opt ​​for a tenure of 25 years or more if you reprint and switch to another plan.

Documents required for mortgage loan:

For monthly salaried persons

• Latest Salary Receipt Bank Details for last three months
• PAN Card/Form 60 of all applicants
• Proof of identity
• Address proof
• A document of the property to be mortgaged
• I.D. Taking admission
• Title document

For Self Employed Persons

• Basic Bank Account Details of last six months PAN Card / Form 60 of all applicants
• Address proof
• Proof of identity
•  Income documents like ITR returns and financial statements
• Title documents of the property to be mortgaged.

 Please note that additional documents to the list of documents included may be required during the process.

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