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Overview

What Is a Mortgage Loan? Meaning, Types and How It Works in India

A mortgage loan is a loan secured by property; Section 58 of the Transfer of Property Act, 1882 defines the mortgage and its six types.

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Written by Ananya Iyer

Updated on 17 September 2026·6 min read

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A mortgage loan is a loan secured by property: you pledge a house, flat or plot, and the lender can sell it if you do not repay. Section 58 of the Transfer of Property Act, 1882 defines a mortgage as the transfer of an interest in specific immovable property to secure a loan. With a typical bank loan you keep living in the property until you repay.

Mortgage loan meaning: key facts

Term Meaning
Mortgage Transfer of an interest in specific immovable property to secure a loan or debt
Mortgagor You, the borrower who offers the property
Mortgagee The lender, such as a bank or housing finance company
Mortgage money The principal and interest the property secures
Mortgage deed The document that creates the mortgage, if there is one
Law Sections 58 to 104, Transfer of Property Act, 1882
Home loan rates, 12 lenders tracked 7.15% to 13.20% (17 September 2026)
Return of property papers after full repayment Within 30 days; ₹5,000 a day if the lender causes a delay

How a mortgage loan works

#ItemDetails
1You apply.The lender checks your income, credit score and existing loans to decide how much you can borrow.
2The lender checks the property.A lawyer verifies the title and a valuer puts a market value on it.
3The loan is sized to the property.For housing loans, RBI rules cap the loan-to-value ratio: the cap is 90% for loans up to ₹30 lakh, 80% for ₹30 lakh to ₹75 lakh, and 75% above ₹75 lakh.
4The mortgage is created.Many lenders use a mortgage by deposit of title deeds: you hand over the original sale deed and related papers.
5You repay in EMIs.Each EMI covers interest plus part of the principal. Early EMIs are mostly interest.
6The mortgage ends.Within 30 days of full repayment, the lender must return your original documents and remove any charge it registered with a registry.

A term loan mortgage works the same way: a fixed sum repaid in EMIs over a set term, often 15 to 30 years for a home loan. You can estimate your EMI with our EMI calculator.

Types of mortgage under Indian law

Section 58 of the Transfer of Property Act names six types.

Type How it works
Simple mortgage You keep possession and personally promise to repay. If you default, the lender can have the property sold.
Mortgage by conditional sale You appear to sell the property. The sale becomes final if you default, or is undone when you repay. The condition must be in the sale document.
Usufructuary mortgage The lender takes possession and keeps the rent or income in place of interest or repayment until the debt is cleared.
English mortgage You transfer the property outright, and the lender must transfer it back once you repay on the agreed date.
Mortgage by deposit of title deeds You deliver the title documents to the lender to create security. It is allowed in Kolkata, Chennai, Mumbai and other towns notified by the state government.
Anomalous mortgage Any mortgage that does not fit the five types above.

Section 59 says a mortgage securing ₹100 or more must be made by a registered deed, signed by you and attested by two witnesses. A mortgage by deposit of title deeds is the exception: it needs no registered mortgage deed.

Home loan and mortgage loan: the difference

Every home loan is a mortgage, because the house you buy secures it. In Indian banking, though, “mortgage loan” usually means a loan against property (LAP): you borrow against a home or shop you already own, for almost any purpose.

Point Home loan Loan against property
Purpose Buy, build or repair a house Almost any purpose, including business
Security The house being bought or built A property you already own
Typical rate Lower Higher; SBI charges 8.95% to 10.50%, against 7.25% to 8.55% on its home loan

For current lender-by-lender rates on both, see our guide to mortgage loan interest rates.

What a mortgage loan costs

The 12 home loan lenders we track charge 7.15% to 13.20% a year, as of 17 September 2026. Most floating rates track the RBI repo rate, which is 5.25%. The RBI’s next policy meeting runs from 5 to 7 October 2026.

On a ₹50 lakh loan over 20 years, a 7.25% rate means an EMI of ₹39,519 and total interest of ₹44,84,512. Beyond interest, budget for:

  • a processing fee, often 0.35% to 1% of the loan plus GST;
  • legal and valuation charges;
  • stamp duty on the loan or mortgage document, which varies by state.

Lenders cannot charge a prepayment fee on a floating-rate loan taken by an individual for a non-business purpose. This applies to loans sanctioned or renewed from 1 January 2026.

What happens if you do not repay

Missed EMIs are reported to the credit bureaus, which now receive lender data on the 9th, 16th and 23rd and the last day of every month. If a loan becomes a non-performing asset, a bank can act under Section 13(2) of the SARFAESI Act, 2002. It sends a written notice giving you 60 days to repay in full. If you do not, it can take possession of the property and sell it without first filing a suit. You can challenge such action before the Debts Recovery Tribunal.

Your right to redeem the property by paying what is due is protected by Section 60 of the Transfer of Property Act, until a court decree or the parties’ own act ends it. If you are struggling, talk to your lender before the account turns bad. For a dispute about how a bank handled your loan, you can complain under the RBI Integrated Ombudsman Scheme, 2026. For complex cases, a lawyer can advise on your rights.

Frequently asked questions

What is a mortgage loan in simple words?

It is a loan where you pledge property as security. If you repay, the property stays yours with no claim on it; if you default, the lender can sell it to recover the money.

What is a mortgage loan in India?

Legally, it is any loan secured by a mortgage of immovable property under the Transfer of Property Act, 1882. In bank terms, it usually means a loan against property.

How does a mortgage loan work?

The lender values your property, lends a share of that value and holds your title documents until you repay in EMIs. After the last EMI, it must return the papers within 30 days.

What is the purpose of a mortgage loan?

A home loan mortgage pays for a house. A loan against property can fund education, medical costs, a wedding or a business, using a property you already own.

What is the term of a mortgage loan?

Home loans often run up to 30 years. Loans against property usually have shorter terms: Bank of Baroda’s standard card covers up to 10 years, and SBI’s up to 15.

Who keeps the property documents during a mortgage?

The lender keeps the original title documents. It must return them within 30 days of full repayment, at the branch that serviced the loan or another office holding them, as you prefer. If the delay is its fault, it pays you ₹5,000 a day.

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