Highlights:
- The common types of mortgage loans in India include home loans, land loans, loans against property, and reverse mortgages.
- A mortgage can also refer to the legal method used to create security over property, such as a simple mortgage or a mortgage by deposit of title deeds.
- Interest rates, loan-to-value (LTV) ratio, tenure, property value and borrower profile can affect the cost and amount of a mortgage loan.
Buying a home is not the only reason people borrow against property.
You may need money to purchase a house or plot, construct a property, renovate your home, or raise funds against a property you already own.
This is where mortgage loans come in. However, the types of mortgage available depend on the purpose of borrowing and how the property is offered as security.
Let's understand the common options in simple terms.
What Is a Mortgage Loan?
A mortgage is a legal arrangement in which an interest in immovable property is used as security for a loan or financial obligation.
In everyday banking, the term is commonly associated with loans where property acts as security. The Transfer of Property Act, 1882, also recognises different legal forms of mortgages.
The main types of mortgage loans include:
- Home loans
- Loans for land or plot purchase
- Loans against property
- Commercial property loans
- Reverse mortgage loans
Types of Mortgage Loans in India
1. Home Loan
A home loan is generally used to buy or construct a residential property. Depending on the lender, it may also cover certain repair, renovation, or extension requirements.
The property generally acts as security, and the borrower repays the loan through EMIs over the agreed tenure.
One important number to check is the loan-to-value (LTV) ratio.
For individual housing loans from scheduled commercial banks, RBI's framework provides LTV ceilings of up to 90% for loans up to ₹30 lakh, 80% for loans above ₹30 lakh up to ₹75 lakh, and 75% for loans above ₹75 lakh, subject to applicable conditions.
This means you may need to arrange part of the property cost from your own funds.
2. Loan for Land Purchase
A loan for land purchase can help finance the purchase of a residential plot for constructing a house, subject to the lender's conditions.
Before applying, check whether the lender finances your type of plot and location. You should also understand any requirements related to construction, approvals, and timelines.
A plot loan should not automatically be treated as financing for land purchased purely as an investment.
3. Loan Against Property
A loan against property, or LAP, allows you to use an existing property as security to raise funds.
Unlike a home loan, you are not necessarily borrowing to purchase the property being offered as security.
Depending on the lender, residential or commercial property may be accepted. The amount offered can depend on the property's value, LTV ratio, income, existing obligations, and credit profile.
Since the property secures the loan, failure to repay can put the property at risk.
4. Commercial Property Loan
A commercial property loan is designed for eligible property-related requirements involving commercial real estate.
The lender may assess the property's legal and technical status, your income or business cash flows, existing obligations, and repayment capacity.
The eligibility and terms can differ considerably from residential home loans.
5. Reverse Mortgage Loan
A reverse mortgage is different from a regular home loan.
It is designed for eligible senior citizens who own a residential property and want to access funds against their home equity.
RBI's consumer guidance states that homeowners aged 60 years and above can be eligible, subject to applicable conditions. The borrower may receive a lump sum or periodic payments depending on the arrangement.
The loan generally becomes due under specified circumstances, such as the last surviving borrower dying, selling the property, or permanently moving out.
What Is an Equitable Mortgage?
An equitable mortgage is commonly understood as a mortgage created by depositing the title deeds of a property with the lender with the required intention to create security.
The Transfer of Property Act recognises this as a mortgage by deposit of title deeds under Section 58(f).
The documentation and registration requirements can vary based on the location and applicable rules.
What Are the Legal Types of Mortgage?
The phrase types of mortgage can also refer to legal classifications under the Transfer of Property Act.
These include:
| Type | Meaning |
| Simple mortgage | Property can be sold to recover the debt if the borrower defaults, subject to law |
| Mortgage by conditional sale | Mortgage is structured around conditions attached to a sale |
| Usufructuary mortgage | Mortgagee may receive rents or profits from the property |
| English mortgage | Property is transferred to the lender subject to re-transfer after repayment |
| Mortgage by deposit of title deeds | Security is created by depositing title documents |
| Anomalous mortgage | Combines features of different mortgage types |
These are legal forms of mortgage, not necessarily separate loan products offered by every lender.
What Is the Current Bank Rate?
The Bank Rate is an RBI policy rate and should not be confused with the interest rate offered directly to a borrower.
As per RBI's rate information dated July 10, 2026, the Bank Rate was 5.50%, while the policy repo rate was 5.25%.
These rates can change, so check the latest RBI information when publishing or updating this article.
How Does the Repo Rate Affect Mortgage Loans?
The repo rate in India can influence broader borrowing conditions, but it is not the same as your mortgage interest rate.
Your actual loan rate can depend on the lender's benchmark, loan type, borrower profile, spread, and whether the rate is fixed or floating.
Therefore, a change in the repo rate does not necessarily mean your mortgage rate will change immediately or by the same amount.
What Should You Check Before Taking a Mortgage Loan?
Before choosing between different types of mortgage loans, compare:
- Interest rate and whether it is fixed or floating
- Loan amount and LTV ratio
- EMI and loan tenure
- Processing and other applicable charges
- Prepayment or foreclosure terms
- Property valuation and legal requirements
- Total repayment amount
Don't compare loans only on the advertised interest rate. A lower rate with higher charges may not always be the cheaper option.
Home Loan vs Loan Against Property
| Feature | Home Loan | Loan Against Property |
| Main purpose | Buy or construct a home | Raise funds against an existing property |
| Property | Usually the property being financed | Existing property |
| Repayment | Usually through EMIs | Usually through EMIs |
| Key consideration | Property + repayment eligibility | Property value + repayment capacity |
Conclusion
The types of mortgage loans in India can be easier to understand when you separate loan products from legal mortgage classifications.
Home loans and loans for land purchase are generally linked to property purchase or construction, while a loan against property allows you to raise funds against an existing property. A reverse mortgage works differently and is designed for eligible senior homeowners.
An equitable mortgage, meanwhile, describes a method of creating security through the deposit of title deeds.
The repo rate in India, current Bank Rate, LTV ratio, interest rate, and loan tenure can all be useful numbers to understand before borrowing.
Most importantly, compare the complete cost and repayment terms before choosing a mortgage loan.
FAQs
1. What are the main types of mortgage loans in India?
Common types include home loans, loans for land purchase, loans against property, and reverse mortgage loans.
2. What is an equitable mortgage?
An equitable mortgage is created when the borrower deposits the property’s title deeds with the lender with the intention of creating security for the loan.
3. Can I get a loan for land purchase?
Yes, some lenders offer loans for purchasing residential plots, subject to their eligibility criteria and conditions.
4. What is the difference between a home loan and a loan against property?
A home loan is generally used to buy, build, or construct a home, while a loan against property uses an existing property as security for borrowing.
5. Does the repo rate affect mortgage loan interest rates?
The repo rate can influence borrowing conditions and some lending rates, but your actual mortgage interest rate depends on the lender, loan type, benchmark, and other factors.
