The demand for mortgage loans is growing exponentially in recent years. It is a type of secured loan that you can avail by keeping your immovable and movable assets, like a house, office-space, jewelry, and securities, as collateral with the lender. Available for both self-employed and salaried professionals, a mortgage loan is usually taken to fulfill various financial needs, such as expanding business, paying education expenses, covering medical bills, and many more. Since it is a secured loan, the rate of interest is lower as compared to other loans. Further, you can also use a mortgage loan EMI calculator to compute the value of loan installments you will be required to pay each month.
For a vast majority of the population, taking out a mortgage loan is complicated. The main reason for this is that the borrower may be unaware of the types of properties which can be mortgaged easily. So, don’t fret as here we have discussed common types of properties you can pledge as collateral with lending institutions.
But before, let us understand what ‘property’ exactly means.
What is meant by ‘Property’?
The term ‘Property’ has multiple definitions. But, in most common words, the property is anything that a person legally owns. It can either be tangible (like a house, automotive vehicles, gadgets, industrial equipment, etc.) or intangible that represent current or potential value (such as trademarks, stocks, and bond certificates).
Types of properties which can be mortgaged
Now, it is time to check out the five kinds of properties that you can easily mortgage.
1. Residential property
Owning a house is a dream for all, as it provides a sense of safety and security. But, at the same time, it can provide you with an added financial advantage. The house, apartment, or flat you own can be an excellent immovable property you could mortgage to gain instant funds for covering your personal as well as business needs quickly. Besides, lending institutions typically prefer to extend loans against residential properties over others and also provide lower interest rates on them.
2. Commercial property
Commercial property, such as an office building, warehouse, shopping complex, garages, etc. is also another type of property that you can mortgage to take your financial dreams to the next level. Also known as real estate property, commercial mortgages are for 15 years or more. Further, as compared to residential property, you will be charged a higher rate of interest on commercial properties as these carry a high-risk factor.
If you have a vacant land without any built-up property, then it can also act as a viable option to pledge as a mortgage with the lender. Since the price of the property may increase in the future, you will secure not only the loan but also the increased land value at the end of the loan tenure. However, make sure that you have clear titles to the land to offer it as a mortgage.
4. Gold assets
Taking out a loan against gold assets, such as gold coins and jewelry, is a convenient solution to meet your personal and professional needs. Various lenders allow you to avail loans against gold coins, biscuits, and ornaments with minimum paper-work. And, because they are easily tradable, gold assets carry a lower interest rate as compared to other properties.
If you are in urgent need of cash and your funds are tied up in securities, then you can mortgage them. Securities, such as shares, bonds, mutual funds, IPOs, etc., can be accepted as collateral for a loan to cover your short-term financial needs. The major advantage of pledging your securities is that first, you can get instant cash when you need, and second, you would not have to compromise with your high-value portfolio and continue to earn high returns on dividends and bonuses
The Bottom Line
No matter the kind of property, make sure you are aware of the loan, mortgage, as well as document requirements of different lenders. Additionally, also compare your property options, interest rates, and taxes accordingly.