What is Mortgage Loan? | Difference Between Home Loan Vs Mortgage Loan
Friends, you must have heard the name of Mortgage loan but do you know what is Mortgage loan and how many types of Mortgage loan are there and what is the difference between Home loan and Mortgage loan if your answer is no and you are from Mortgage loan Want to get more related information. So you stay with this article of ours till the end, so let’s start this article without delay.
What is Mortgage loan ?
Mortgage loan is a loan taken against property. Whenever you take a loan, you will need collateral for this. In such a situation, you will have to give the papers of your farm or property to the bank.
If you do not have the property papers, then your loan can also be accepted in this situation. In simple language, the loan given against mortgage of property is called mortgage loan. You have to deposit your property documents in the bank.
In return, it provides you a loan for a fixed time period. If you are unable to return the total amount and onion amount to the bank during this time period, the bank has the right to confiscate your property legally.
Example: Let us understand mortgage loan as an example. Suppose you need a loan of ₹ 500000. For this you go to the bank. The bank asks you for property papers of about ₹ 700000. (It is often seen that the bank provides loan from 80 to 85 of your property only.)
If you submit the documents of your property in the bank, then the loan is provided to you by the bank. You have to repay this loan in installment rate within a specified time period.
If due to any reason you are unable to repay this loan. So in this situation the bank can take legal action and auction your property and recover your money.
What are the types of Mortgage Loan
Friends, there are many types of mortgage loans too. Out of which mainly we get to see examples of three types of mortgage loans in daily life.
- Mortgage registry loan
- Mortgage by conditional sale
- Usufructuary mortgage
Mortgage Registry Loan
You must have heard about home loan. Actually home loan is taken with the help of bank. We buy a house with the money given under the home loan. We have all the ownership rights of this house. But the bank has to pay us the principal amount as well as interest every month.
This type of loan is called mortgage registry loan. In simple language it is called simple mortgage. Actually in the beginning it is only mortgage lawn. Loan But after registration, it is called Mortgage Registry Loan.
Mortgage by Conditional Sale
This is the type of loan in which the loan holder can transfer the loan to the bank due to non-repayment of the loan. But it is not completely cell. It has some conditions.
On the basis of which people are sold to the bank. When the customer has paid off the entire loan, it is returned to the customer again. In this the ownership is not transferred to the bank. Because there are many such conditions in this loan. That’s why it is called Mortgage by conditional sale.
Who is rarely taken in the country of India? There is not much benefit to the customer in this. In this type of loan, all the property rights are given to the bank. Till the time the bank loan is not repaid, the bank can also charge rent from you for the use of this property.
Due to these reasons, this loan is taken less in India. Because in this all types of rights are given to the bank. After repayment of the Usufructuary mortgage loan, the ownership of the property is transferred.
Difference Between Home Loan And Mortgage Loan
- Home loan definition :- Intend to buy residential property or a piece of land.
- Mortgage Loan definition :- There is no restrictive covenant on this type of loan. Borrower can use the loan amount for any purpose.
- Loan-to-Value (LTV) Ratio In home loan :- Typically 85-90% of the current market value of the property.
- Loan-to-Value (LTV) Ratio In Mortgage Loan :- 60-70% of the current market value of the property.
- Rate of interest In home loan :- lower than mortgage. loans.
- Rate of interest In Mortgage Loan :- 1-3% higher than home loan.
- processing fee In home loan :- 0.8-1.2% of the total loan amount.
- processing fee In Mortgage Loan :- 1.5% of the total loan amount.
- loan term In home loan :- up to 30 years
- loan term in Mortgage Loan :- up to 15 years
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I hope that you have liked this article of mine very much and with the help of this article, you must have got information about wha is Mortgage Loan, In this article we have tried to tell you about every information related to Mortgage Loan, using the simplest language possible.