Understand About Types of Mortgage Loans
Jun 12, 2025 | 4 mins read
Mortgage loan interest rates represent the cost charged by lenders for providing funds against property collateral, expressed in annual percentage terms (p.a.). They are broadly classified into:
In India, mortgage loan rates generally start around 9% p.a., varying with credit score, loan-to-value ratio, property category, and lender policies. A sound grasp of these rates aids in evaluating loan affordability and financial planning.
Before applying for a mortgage loan, it is essential to understand the associated interest rates and comprehensive fees involved. Below is an indicative snapshot relevant to L&T Finance and prevalent industry standards:
| Type | Fee/Rate |
|---|---|
| Processing Fees | Up to 3% of sanctioned amount + applicable taxes |
| Login Fees: | Up to ₹ 5000/- (inclusive of applicable taxes)(non refundable) |
| EMI Dishonour/Bounce Charge* | As shown in the table below |
| *A bounce charge is a charge for (i) dishonour of any repayment instrument; or (ii) non-payment of instalment(s) on their respective due dates due to dishonour of payment mandate or non-registration of the payment mandate | |
| Loan sanction amount (in INR) | Charges in (in INR) |
| < ₹ 5 Lakh | ₹ 500 |
| ₹ 5 Lakh - ₹ 50 Lakh | ₹ 1000 |
| > ₹ 50 Lakh – ₹ 2 Crore | ₹ 1500 |
| > ₹ 2 Crore | ₹ 2000 |
| Penal Charge/Late Payment Charges (LPC): | 2% per month on overdue EMI |
| *LPC revised from 3% to 2% per month on overdue EMI w.e.f. 4th Dec 2023 | |
| *Taxes applicable on LPC w.e.f. 1st Apr 2024 | |
| Statement or document retrieval charges | Duplicate NOC (charge is applicable for paper copy post 3 free copies per customer), list of documents, Photo copies of the documents (property & others) Rs.1000/- + applicable taxes |
| Repayment instrument swap fee | Rs. 500/- + applicable taxes (applicable only for branch walk-ins) |
| Asset valuation and verification fee | 1% of loan amount + applicable taxes |
| Documentation and repayment setup fee | Rs.2,000/- + applicable taxes |
| Interest conversion fee | Floating interest rate to floating interest rate: 0.5% of balance Loan Amt. or Rs. 10,000/- whichever is higher + applicable taxes |
| Floating interest rate to a fixed interest rate and vice versa: 1% of balance Loan Amt. or Rs. 10,000/- whichever is higher + applicable taxes | |
| Charges incurred by LTF for initiating action under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002: | Issue of Loan Recall Notice = ₹ 500/ – |
| Issue of Demand Notice = ₹ 1,000/ – | |
| Issue of Possession Notice = ₹ 2,000/ – | |
| Applying District Magistrate Order = ₹ 8,000/ – | |
| Taking Physical possession = ₹ 20,000/ – | |
| Actual cost incurred will be debited for expenses pertaining to Publication of Possession Notice/ Publication Demand Notice/Publication of Sale cum Auction Notice | |
| Legal / Recovery Charges (Other than pertaining to SARFAESI): | As per actuals |
| Loan Cancellation Charges: | Rs. 5000/– + applicable taxes |
| Recovery of proportionate actual expenses from disbursement date(s), from individual borrower(s) in | LAP – Up to 1% of total disbursed loan amount + applicable taxes in case of closure within 24 months |
| Foreclosure / Full Prepayment Charges – Loan Against Property: | For Individual Borrowers – |
| Floating Rate – Nil Charge | |
| Nil Charges where end use is not for business/commercial purpose | |
| For cases where end use is for business/commercial purpose | |
| i. Less than 1 year from disbursement – up to 3% principal outstanding + applicable taxes | |
| ii. Post 1 year of disbursement – up to 2% on principal outstanding + applicable taxes | |
| Fixed Rate – | |
| i. Less than 1 year from disbursement – up to 4% principal outstanding + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on principal outstanding + applicable taxes | |
| For Non – Individual Borrowers – (Applicant/Co – applicant) | |
| Fixed/Floating rate loan – | |
| i. Less than 1 year from disbursement – up to 4% principal outstanding + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on principal outstanding + applicable taxes | |
| Pre-payment Charges – Loan Against Property | Floating Rate – |
| Nil Charges where end use is not for business/commercial purpose. For cases where end use is for business/commercial purpose | |
| i. Less than 1 year from disbursement – up to 3% on Partial/Pre-payment amount + applicable taxes | |
| ii. Post 1 year of disbursement – up to 2% on Partial/Prepayment amount + applicable taxes | |
| Fixed Rate – | |
| i. Less than 1 year from disbursement – up to 4% on Partial/Pre-payment amount + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on Partial/Pre-payment amount + applicable taxes | |
| For Non – Individual Borrowers – (Applicant/Co – applicant) | |
| Fixed/Floating rate loan – | |
| i. Less than 1 year from disbursement – up to 4% on Partial/Prepayment + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on Partial/Prepayment amount + applicable taxes | |
| Foreclosure / Full Prepayment Charges – for Dropline Overdraft / Hybrid Overdraft | Floating Rate – |
| Nil Charges where end use is not for business/commercial purpose. For cases where end use is for business/commercial purpose | |
| i. Less than 1 year from disbursement – up to 3% on Dropline Limit + applicable taxes | |
| ii. Post 1 year of disbursement – up to 2% on Dropline Limit + applicable taxes | |
| Fixed Rate – | |
| i. Less than 1 year from disbursement – up to 4% on Dropline Limit + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on Dropline Limit + applicable taxes | |
| For Non – Individual Borrowers – (Applicant/Co – applicant) | |
| Fixed/Floating rate loan – | |
| i. Less than 1 year from disbursement – up to 4% on Dropline Limit + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on Dropline Limit + applicable taxes | |
| Pre-payment Charges – – for Dropline Overdraft / Hybrid Overdraft: | Not allowed till the day after the First Due Date. No Charges applicable from the day after the First Due Date |
| Part pre-payment of Loan toward limit reduction is not available | |
| Non-Compliance Charges: | 1% p.a. of principal outstanding loan amount + applicable taxes |
| Breakup between Principal & Interest: | Breakup between Principal & Interest: As per Repayment Schedule |
| Example of SMA/ NPA classification: | More particularly mentioned under “Classification of Assets” under the head “Miscellaneous” |
| Field collection service fee: | Rs. 500/- per collection + applicable taxes |
| Legal fees and charges: | Up to Rs.50,000/- + applicable taxes |
| Recovery charges: | Up to Rs.1,00,000/- + applicable taxes |
| Auction fees: | Up to 1% of auction sale amount + applicable taxes |
Interest on Mortgage loan are influenced by a combination of borrower-specific, loan-related, property-related, and macroeconomic factors, including:
1. Property Type and Location
2. Borrower Credit Score and Financial Profile
3. Loan Amount & Loan-to-Value (LTV) Ratio
4. Loan Tenure
5. Economic & RBI Policies
Mortgage interest on loans is calculated predominantly by the Equated Monthly Installment (EMI) method, which uses compound interest principles.
The EMI calculation formula is:
EMI = [P x R x (1+R)^N] / [(1+R)^N - 1]
Where:
This formula enables borrowers to determine fixed monthly payments, facilitating budgeting and loan management.
Simple interest, while less common in mortgage calculations, follows:
Interest = Principal * Rate * Time / 100]
Understanding these concepts allows borrowers to estimate total interest and repayment schedules accurately, or you can use a mortgage loan EMI calculator to quickly estimate your monthly payments and plan your finances.
The Indian mortgage landscape offers diverse loan types tailored to borrower needs and property categories:
Each type has distinct legal implications and borrower/lender responsibilities.
L&T Finance provides tailored mortgage loan products to serve varying borrower requirements in the secured loan space:
These options are designed to offer flexibility, competitive rates, and convenient features.
Applying for a mortgage loan with L&T Finance is streamlined to enhance borrower convenience:
1. Visit the L&T Finance official website or loan portal.
2. Click on "Apply Now" for a Loan Against Property.
3. Enter your PIN code and proceed.
4. Fill in mandatory personal details such as full name, contact number, and loan preferences.
5. Select loan type, net monthly income, property location, existing obligations (EMIs), and desired loan amount.
6. Complete phone verification using OTP.
7. Upload required documents, including identity, address, income proofs, and property documents.
8. Submit your application.
A representative will follow up for eligibility verification, document validation, and assist with loan processing.
This complete process ensures transparency, simplicity, and compliance, helping customers make the most of their property assets. Keep all the documents required for a mortgage loan ready for quick verification and smooth processing.
A personal loan is an unsecured credit facility with generally higher interest rates and lower loan amounts. A mortgage loan is secured by collateral, typically property, enabling higher loan limits and lower rates due to reduced lender risk.
Mortgage loan interest rates at L&T Finance currently start from 9.55% p.a., varying by borrower credit profile, loan amount, tenure, and property type.
For floating-rate loans, the interest rate on mortgage loan changes in line with movements in the RBI repo rate or the lender’s benchmark rates, typically reviewed quarterly or biannually. Fixed-rate loans remain unchanged throughout the tenure.
Maintain a high credit score, offer good collateral, and opt for a shorter tenure to secure the lowest interest rate.
L&T Finance offers competitive interest rates, high loan limits, simple documentation, customizable tenure, and robust customer support, making it a preferred choice for many borrowers across India.
A home loan is taken specifically for the purchase or construction of residential property. A mortgage loan (Loan Against Property) is taken against an existing property for varied purposes, including business capital, education, or debt consolidation.
Longer tenures reduce EMI amounts but increase the total interest on mortgage loan paid over time. Shorter tenures have higher monthly payments but lower cumulative interest costs.
Yes, existing borrowers may transfer or balance transfer their loan to a lender offering a lower interest rate on mortgage loan, subject to eligibility and lender approval.
Yes, fixed-rate loans lock your interest rate for the loan tenure, ensuring stable payments. Floating rates vary as per market conditions, which can increase or decrease your interest costs over time.
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