20 APRIL, 2022

Loans help fulfil your needs when you do not have enough savings to spare. You can apply for them online and can repay them as per your financial comfort and affordability. As per your usage, there are different categories of loans that you can opt for. One such loan is a mortgage loan. In a mortgage loan, you borrow money by mortgaging an asset. A mortgage loan is safer for lenders compared to unsecured loans. You, as a borrower, also get lower interest rates and higher repayment tenure with a mortgage loan. However, there are multiple types of mortgage loans available in India. Unless you know about each of them, it could be difficult to choose the right one for you.  


  • Loan against property

A loan against property (LAP) is a loan offered on both commercial and residential properties. Borrowers are required to mortgage their property to avail a loan from the lender. You can repay the loan in equal EMIs. You can calculate your EMI with the help of a loan against property calculator.


  • Home loan

With home loans, you can buy a house property, be it an apartment, bungalow or for construction. Once you select the house you want to purchase, you can apply for a loan. The property you buy is mortgaged with the lender till you repay the loan amount. The interest rates of home loans are competitive, and you get tax benefits on them. 


  • Commercial purchase

A commercial purchase loan offers finances to entrepreneurs and businesspersons to buy commercial properties like office spaces, commercial complexes, shops, etc. The interest rates on such loans are competitive, and the loan can be utilised for buying a property of commercial use only.


  • Lease rental discounting

Many people own commercial properties and rent them out. Lease rental discounting (LRD) is a type of term loan secured against such income-producing commercial assets. The LRD loan is based on the idea that you have a set rent on your leased property, which you may utilise as a collateral to rapidly produce income. The loan amount and tenure depend upon the length of the lease, and the rent is utilised as EMI.


  • Second mortgage loan

A second mortgage loan is an additional loan that can be taken on a property that is already under a certain loan. It is usually known as a top-up loan on a home loan, and the lender would approve this loan based on the borrower’s credit score and repayment history.


  • Reverse mortgage

A reverse mortgage allows senior citizens with considerate home equity to borrow money from banks and financial institutions against their home property and receive cash in a lump sum or per month. Unlike traditional mortgage loans, reverse mortgages don't require homeowners to make monthly mortgage payments. After the borrower dies or moves away, the lender can sell the property to regain the borrowed amount.


Each mortgage loan serves a different purpose and has varying tenures and interest rates. You must assess your needs and financial capability before you opt for a mortgage loan.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.