A mortgage loan is a type of financial instrument where a borrower can avail finances from a lender based on the pledging of an immovable asset. The asset would be under the lender’s custody once the borrower repays the entire principal and the interest amount. 

Benefits of a mortgage loan:

Secured loan: A mortgage loan or a loan against property is known as a secured loan. In the case of defaults, the borrower can take control of the asset to recover the finances. Alternatively, as a borrower, you can also sell off a part of your asset to settle the loans. 

Rate of interest & tenure: Compared to unsecured loans, such loans have comparatively lesser mortgage loan interest rates and longer tenures. As the asset is with the financial institution, flexibility is provided in the interest rate and tenure.

Processing & documentation: Mortgage loan processing is relatively quicker as the lender would assess your plot to approve the finances accordingly. The necessary documentation would comprise of KYC, land/plot documents, income proof, and other relevant documents.

Types of Mortgages:

Mortgage loan types are as follows:

• Simple mortgage (where the prime control is with the lender)
• Usufructuary mortgage (where the borrower transfers the possession to the lender)
• English mortgage (In case of successful payback, the borrower can regain the possession of asset)
• Mortgage by conditional sale
• Mortgage by title deed

Conclusion

Pledging your property is a huge decision, and you should entrust your asset with a lender who has a good reputation and is trustworthy in the market. 

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