types of mortgage loan

Financing your dreams can often seem daunting, especially when you need a large amount of money. What if you could use your own property to get a loan? Sounds like the ideal solution, right? Well, it is! A loan against property or mortgage loan is a type of secured loan that makes use of a property as collateral to receive a significant sum of money for personal or business purposes.

In this article, we’ll discuss the various types of mortgage loans and what you need to be eligible to get a loan against property.

Types of Mortgage Loans

There are different types of mortgage loans to fit your specific needs. Let’s dive into the details.

1. Residential Mortgage Loan

A residential mortgage loan is used to purchase a residential property or to refinance an outstanding loan against the property you currently own. As its name suggests, this loan is targeted for individuals looking to buy a plot to build a home or for those who already own a home but want to use it as collateral to secure a substantial loan.

2. Commercial Mortgage Loan

A commercial mortgage loan is meant for business owners who need large sums of money to grow their businesses or expand operations. Business owners can use their commercial property as collateral to get a loan, which can then be used to buy a new property, equipment, or pay off liabilities.

3. Industrial Mortgage Loan

An industrial mortgage loan is designed for businesses that operate in the manufacturing or production space. These loans can be used to purchase land, machinery, and working capital to expand their capacity and production.

4. Loan Against Lease Rental Discounting (LARD)

LARD is a type of mortgage loan where the borrower can pledge their future rent receivables as collateral to get a loan. This loan is beneficial for individuals or companies who have leased out a commercial or industrial property and receive regular rental income.

Eligibility Criteria

Loan against property eligibility criteria varies from lender to lender. However, when you aim to get a mortgage loan online, most lenders will generally evaluate the following criteria:

1. Age

The minimum age to be eligible for this loan is generally 21 years, and the maximum age should not exceed 60 – 65 years. The maximum age limit varies from bank to bank.

2. Property Type

The property you pledge as collateral should be in your name and be free from encumbrances. The lender will verify the property’s value through a legal evaluation and might also physically inspect it.

3. Income

Lenders will check your income to determine your repayment capacity. They will ask for your salary statements, income tax returns, and bank statements for the previous 6 months or more.

4. Credit History

Your credit score will be checked by the lender to determine your creditworthiness and the interest rate that you’ll be charged. If you have a good credit score, you’ll get a lower rate of interest, which translates into lower EMIs.

5. Loan-to-Value Ratio (LTV)

The loan amount you can get depends on the value of the property you pledge as collateral. The LTV ratio, that is, the ratio of the loan amount to the property value ranges from 50% to 90% depending on the property type and the lender’s internal policies.

Documents Required

To apply for a loan against property, you need to submit the following documents:

1. Identity and Address Proof

You’ll need to provide a copy of your PAN card, Aadhar card, passport or driving license as proof of identity. You’ll also need to submit a copy of a utility bill, rental agreement, or property tax receipt as proof of address.

2. Property Documents

You’ll need to submit the property documents, including the sale deed, title deed, and possession letter. If the property is under construction, you’ll need to submit the approved plan and loan agreement with the builder.

3. Income Documents

You’ll need to submit proof of income, which could include salary slips, Form 16, ITR, and bank statements. If you’re self-employed, you’ll need to provide a copy of the business registration certificate, income tax returns, and profit and loss statement.


If you need a large sum of money and have a property to pledge as collateral, a loan against property might be the perfect solution for you. The eligibility criteria and documents required might seem overwhelming, but with the right understanding and preparation, it is possible to get a mortgage loan in no time.

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