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6 Different Mortgage Loans Types Explained for Home Buyers

A mortgage loan is a secured loan where prospective loan borrowers keep their property, such as their house or land, as collateral. After getting the credit from a financial institution, a borrower must pay back the money in regular instalments over a predetermined time.

However, depending on the borrower’s needs, various types of mortgage loans are available in India. The 6 most popular types of mortgage loans are discussed below. 

6 Different Types of mortgage loan 

The six different types of mortgage loans include: 

Type: 1 Simple mortgage

A borrower uses a simple mortgage method to secure a loan by collateralising their home to a lending company. While the borrower continues to be in possession of the specified property, the lender is fully authorised to sell it to recover his losses in case of a payment default.

In contrast to other mortgages, which calculate interest rates every month, a simple mortgage computes interest rates daily.

Type: 2 Usufructuary mortgage

For usufructuary mortgages loa, a borrower must assign the lender ownership and possession of the concerned property. Until the loan is fully repaid, the lender has the right to utilise the mortgaged property and collect any rentals or other earnings.

But, the borrower is permitted to keep his or her property documents. Additionally, because the loan agreement considers the property’s income, borrowers may be eligible for better interest rates and larger loan amounts.

Type: 3 English mortgage 

In an English mortgage, if the borrower defaults on the loan, they consent to give the lending institution ownership of the property. However, a lender must return ownership to a borrower upon full repayment.

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Here, it is important to note that individuals can still live there even though the lending institution will possess it for the duration of the loan.

Type: 4 Mortgage by conditional use 

In a conditional use mortgage loan types, a property owner sells their home to a financier in order to receive a loan, with the understanding that they will be able to get their home back once the loan has been fully repaid. However, according to the agreements negotiated for these loans, such sales only become “absolute” if the property’s original owner is unable to pay back the debt.

Type: 5 Mortgage by deed deposit 

In this case, the borrower gives the lending company their title deeds and other property documents as collateral. Additionally, it requires a spoken affirmation of the borrower’s desire to put a charge on the property and is also known as an equitable or implied mortgage.

Type: 6 Anomalous mortgage

A mortgage loan that does not fall under the above categories can be classified as anomalous. 

Nevertheless, apart from knowing different types of mortgage loans, an individual must also know about a few simple eligibility criteria to qualify for a loan against property before applying. 

Eligibility criteria for a mortgage loan 

Although these parameters differ with lending institutions, some of the general criteria remain the same. A few of those pre-requisites include: 

  • Applicants must be a residing Indian citizen 
  • They should be between the age of 28 to 58 years of age
  • Salaried working professionals should have at least 3 years of work experience
  • Prospective borrowers must have a decent CIBIL score, preferably above 750
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Documents required to avail a mortgage loan 

Apart from knowing the eligibility criteria, borrowers must also know the documents needed for a loan against property. These include: 

  • Identity proof documents (Aadhaar card, PAN card, Voter ID card, etc.)
  • Address proof (Aadhaar card, passport, rent agreement, utility bills)
  • Bank account statement
  • Latest salary slips
  • IT returns
  • Property documents (title deed, sales deed, approved building plan, house tax receipt, etc.)

Here, it is important to note that these requirements might differ with lenders. So, it is advisable to check the official loan against property page of your preferred lender. 


Also, leading financial institutions provide pre-approved offers on loan against property that expedite the loan application process. These offers are also available on other products like home loans, business loans, etc. Individuals can check their pre-approved offers by providing just their name and contact details.

Hence, knowing the types of mortgage loans can significantly ease the loan application process. Also, individuals can visit the official website of their preferred lender to read about other financial products.



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