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Types of Mortgage in the Indian industry
Posted Date: 19 Apr 2008 Resource Type: Articles/Knowledge Sharing Category: General
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Posted By: Bala Member Level: Diamond
Rating:  Points: 6
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Types of Mortgage in the Indian industry
The types of mortgage that are accepted in the Indian mortgage industry for the facilitation of mortgage loan are varied. Until recently, the Indian mortgage market was under the unorganized sector. The Government of India liberal economic policy in the late 1990s the facilitated the entry of foreign institutional investors (FIIs) and foreign direct investment (FII) in the Indian market. The Indian markets which were previously closed to such investments registered tremendous economical growth across all industry sectors.
In the last 15 years, the growth of the manufacturing industry in India propelled the growth of infrastructure industry in India. Furthermore, with the growth of infrastructure industry in India, the Indian mortgage loan industry witnessed tremendous growth. Today, the organized mortgage loan sector of India is registering astronomical growth and it is estimated to be US$ 18 billion industry. The Indian mortgage loan industry is consistently registering 20-50 % growth on a year-on-year basis, from the year 2000 onwards.
Huge real estate requirements in India and their subsequent development have fueled its growth. The mortgage industry of India could break open from its age old image of being housing mortgage facilitator only. Today, the types of mortgage that are being accepted as collateral are varied and not confined to residential property only. The types of mortgage accepted as collateral security for facilitating mortgage loans in India are as follows -
Amusement parks
Bowling centers
Casinos
Auto care centers
Auto dealerships
Car washes
Parking garage
Truck terminal
Conveniences stores
Distribution centers
Fitness centers
Franchises
Funeral homes
Gas stations
Golf courses
Malls
Retail (anchored, single tenant, unanchored)
Mobile home arks
Movie theaters
Resort
Restaurants
Hotels
Motels
Hospitals
Medical clinics
Medical offices
Nursing homes
Rehabilitation facilities
Skilled nursing facility
Special purpose property
Child care centers
Independent living facilities
Mixed use properties
Single family
Offices (multi-tenant, single tenant)
Warehouse
Industrial parks
Industrial buildings
Land developments
Mini warehouses
Office buildings
Outlet centers
Educational institutions
Training institutions
The following types of rates are prevalent in the Indian mortgage market -
Fixed Mortgage Rate - in this case the rate of interest remains fixed throughout the loan term. The mortgage rates do not vary according to market conditions. In other words, the rate of interest is pre-fixed during the process of borrowing and it generally varies between 12.5% and 25 %.
Flexible Mortgage Rate - is one in which the interest rate varies according to market movements. This type of interest rate is called 'adjusting' or 'floating' rates. The risk factor is high in this type of interest rates.
Some of the well-known mortgage-financing companies offering various types of mortgage in India are as follows -
LIC Housing Finance
HDFC
ICICI Home Finance
SBI Housing Finance
UCO Bank
State Bank of India
State Bank of Mysore
Allahabad Bank
United Bank of India
United Commercial Bank of India
Bank of Baroda
Kotak Mahindra Bank
Citi Bank
HSBC
Standard Chartered Bank
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