Buying a house is a financial decision and an emotional investment. However, the skyrocketing prices of properties may become a problem for many. In that case, monetary assistance like a Home Loan can significantly help. At the same time, it is also essential to understand different types of mortgage loans to choose from and make an informed decision.

We will delve into 10+ mortgage options, each with its unique advantages. By the time you finish reading this article, you will have understood which option suits your dream home and financial circumstances.

What are Mortgage Loans?

Mortgage loans are loans where your property is used as security. Whether buying, building, or improving a property, these loans provide the financial backbone to your home aspirations.

Based on Interest Rates

Fixed-Rate Mortgages

Fixed-rate mortgages are the go-to option for those who value consistency in their financial planning. The interest rate stays the same throughout the loan period. Because your EMI remains unchanged, it is easier to plan your finances. It offers you protection against hikes in interest rates.

Floating Rate Mortgages

Floating-rate mortgage loans, also referred to as variable-rate mortgage loans, have interest rates that can change over time. These rates are connected to the base rate established by the bank, which is influenced by the repo rate determined by the Reserve Bank of India.

Floating rates are typically favored in growing economies over those stagnant or experiencing minimal growth.

Adjustable-Rate Mortgages (ARMs)

Adjustable Rate Mortgages, also known as ARMs, are unique in the world of loans because they come with variable interest rates. Unlike fixed-rate mortgages, ARMs provide a period where the interest rates are typically lower. This makes them appealing to borrowers who want to start with smaller payments.

However, it’s important to note that these rates can change based on market conditions. As the market fluctuates, the interest rate on your loan may go up or down over time. This type of mortgage is an option for those who expect their income to increase or plan to refinance before the rate adjusts.

Based on the Nature of the Contract Between the Parties

Simple Mortgage Loan

With a simple mortgage loan, the borrower maintains property ownership while granting the lender the right to sell it in case of default. This provides a safety net for the lender to recover their loan.

Usufructuary Mortgage Loan

In the case of a usufructuary mortgage, the borrower transfers the property to the lender, who then earns income from it. The generated income is used to pay off the loan’s principal amount and interest, making it a unique arrangement for loan repayment.

Subprime or Sub Mortgage Loan

Subprime mortgage loans are designed for borrowers with less-than-ideal credit histories. These loans come with slightly higher interest rates as a way for lenders to manage the risk associated with borrowers with instability or previous loan defaults.

English Mortgage

In an English mortgage, there is an agreement that if the borrower fails to repay the loan by a specified date, they must transfer ownership of the property to the lender. However, once they fully repay their loan amount, ownership rights are returned to them.

Types of Mortgage Loans in India

Loan against Property (LAP)

Loan against property, popularly known as LAP, allows individuals to unlock the financial value of their owned residential or commercial properties. This type of loan provides significant capital that can be used for a variety of purposes, including education, medical emergencies, or consolidating existing debts, offering a flexible solution for those in need of substantial funds.

Commercial Purchase

For businesses who are thinking of an expansion or acquisition, Commercial Purchase loans come as a blessing. They cater specifically to purchasing new machinery, plants, or other essential business assets. These loans provide substantial financial support for commercial ventures, facilitating growth and expansion by utilizing an unutilized commercial property as collateral.

Lease Rental Discounting

Lease Rental Discounting emerges as a strategic financial tool for property owners. It allows borrowers to secure a loan against the future rental income from their property. This innovative lending solution benefits those needing immediate funds while capitalizing on their property’s earning potential.

Home Loan

Home Loans stand as a pillar in the journey towards homeownership, offering tailored financial assistance to individuals. These loans facilitate the purchase or construction of residential properties, bridging the gap between dreams and reality. They are structured to suit various budgets and repayment capabilities, making them a go-to option for aspiring homeowners.

Reverse Mortgages

Reverse mortgages offer a solution, especially for older individuals who own homes. This type of mortgage enables homeowners to tap into the equity accumulated in their property over time and convert it into cash without parting with their cherished home. It’s like unlocking the value of their residence while still being able to live in it.

The standout feature of a mortgage is that there is no need for mortgage payments. Instead, the loan and the accruing interest are repaid when the homeowner chooses to move out or sell the property or upon the borrower’s passing. This arrangement provides a source of income or a lump sum amount while ensuring that the homeowner can continue residing in their home.

Second Mortgage Loans

A second mortgage loan allows homeowners to access the equity in their property. This kind of loan can be highly beneficial for getting funds that can be used for many purposes, such as making home improvements, paying for education expenses, or even creating a financial safety net during challenging times.

Understanding Mortgage Calculators: Using a Home Loan Part Prepayment Calculator

● Calculate Savings: A Home Loan part prepayment calculator helps you understand how extra payments reduce interest.

● Plan Your Finances: Use the calculator to strategize repayments and interest savings.


Choosing the right mortgage is a crucial step in your home-buying journey. With this guide to the different types of mortgage loans and tools like a home loan part prepayment calculator, you’re now equipped to make an informed decision. Remember, the best mortgage fits your financial situation and helps you comfortably achieve the dream of owning your perfect home.

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