Maortgage in India

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