Food, clothing, and shelter are our basic needs. At some point in time, we all invest in immovable asset i.e. property. We may invest in residence/ home, commercial property, office spaces, or even buy commercial or residential plots. Apart from adding to assets in our balance sheets, the property also helps you to raise funds in our emergencies by taking a loan on the property.
Since all loans include property they are termed as the secured loans. There are 9 types of loans that you can get on a property. They are as below:
1) Home Loan
A loan taken to purchase a new house is called a “Home Loan”. One may choose to purchase a house directly from a builder or may buy in resale. Therefore in home loan industry home loan are of two types, i.e.
a) Home Loan Builder Case.
b) Home Loan Resale Transaction.
In both types of property is given as security to borrow funds required for purchasing the house in the form of a loan.
2) Commercial Loan.
A loan taken to purchase a commercial property is called a “Commercial Loan”. Commercial property means property used for commercial purposes such as offices, warehouses, factories, commercial land /plot, etc. One may choose to purchase a commercial property directly from a builder or may buy in resale. Therefore in home loan industry commercial loan are of two types:
a) Commercial Loan Builder Case.
b) Commercial Loan Resale Transaction.
3) Mortgage Loan
Also called Loan Against Property, is a loan taken by pledging the property as a security to take the desired amount of loan. Both Mortgage Loan and home loan take property as a security then how dies both differ- the basic difference is- in the home loan the loan amount is paid directly to the builder in builder case or to the reseller in receipt transaction while in the Mortgage Loan the loan amount is credited to the loan borrower’s account.
4) Home Improvement Loan
It is a type of unsecured loan which is taken for the repairs and maintenance reconstruction, development, and renovation of the property.
Home Improvement Loan considers a range of facilities internal or external to the structure without an increase in the living space like painting, tiling and flooring, waterproofing, plumbing, and sanitary work, remodeling kitchen, or bathroom, etc.
Construction of a house on an open plot where an open plot is given as security to take a loan is also a home improvement loan.
A top-up loan is taken for home improvement on home/mortgage Loan where the property is already taken as security can also be termed as a home improvement loan.
5) Reverse Mortgage.
A reverse mortgage is a loan for elderly/senior citizens above the age of 60 years, in which an elderly can avail regular/periodical payments from Banks/ NBFC against the mortgage of their house while still retaining the ownership of the house and occupying the same. Reverse Mortgage does not require any Income or Credit Score requirements, only the senior citizen must possess a property that is self-acquired and self-owned or jointly owned with a spouse. However, it is important to note that no ancestral property or commercial property is eligible for a reverse mortgage.
6) Balance Transfer Loan.
Transferring your existing high-interest rate loan to the bank with a low interest rate is called the balance transfer of the loan. Secured loans like home loans, mortgage loans, or even commercial loans can be transferred to enjoy the benefits of loan EMI in low-interest rates.
7) Secured Business Loan Against Property.
Loan taken for business purposes by self-employed individual/entrepreneur is called a business loan. A business loan is a type of a personal loan but a major difference between the both is – a personal loan is really unsecured loan while a business loan can be secured as well as unsecured.
A property can be given as a security to avail business loan especially when one has to draw higher loan amount.
8) Home Loan & Mortgage Loan O/D.
Apart from taking a traditional home loan or a mortgage loan, an overdraft with a home loan or mortgage loan is the new product in the market since the recent past. Under such a product a loan borrower can withdraw the loan amount as per his requirement of the amount in the form of an overdraft facility.
9) Home Loan & Mortgage Loan Top-Up.
A loan taken on an already existing home/mortgage loan is called a top-up loan.
A top-up loan is taken to meet your immediate requirement of funds, for example, home renovation repairs, children’s education, child marriage, business purpose, etc.