Understand About Types of Mortgage Loans
Jun 12, 2025 | 4 mins read
A Mortgage Loan interest rate is the percentage charged on the amount borrowed against your property. It plays a key role in determining your monthly EMIs and the total repayment amount. Mortgage Loans are secured loans where your residential or commercial property is pledged as collateral. The interest rates on these loans are generally lower than those on unsecured loans. These rates may vary based on the borrower profile and market conditions.
Mortgage Loan interest is usually calculated using the compound interest method through EMI. However, the basic formula for simple interest is:
Simple Interest Formula: Interest = (Principal × Rate × Time) / 100
In practice, EMI is computed with this compound interest formula:
EMI = [P x R x (1+R)^N] / [(1+R)^N - 1]
Where:
Key factors influencing calculation:
The current interest rates for a Mortgage Loan with L&T Finance start from 9.55% p.a.* The detailed fees & charges are listed below:
| List of all fees and charges for Loan Against Property | |
| 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 |
| Document Type | Required Document & Checks |
|---|---|
| Age Proof | Aadhaar Card | PAN Card | Passport |
| Address Proof | Utility bills (not older than 2 months) | Aadhaar Card | Driving License | Passport | Voter ID etc |
| Photo ID Proof | PAN and any one of the following- Aadhaar Card| Driving License | Passport | Voter ID | Job card by NREGA | Letter issued by the National Population Register containing details of name and address |
| Income Proof | Income proofs vary for different professionals across salaried, non-salaried and self employed. |
Please find the easy detailed list of required documents here
| Type | Document |
|---|---|
| Salaried | i. Salary slips for the last 3 months ii. Bank statements for 1 year iii. Latest Form 16 |
| Self Employed: Professionals | i. Latest two ITRs (personal and business) with computation of income
ii. Advance tax challans (if available) iii. Latest two years of P&L accounts and balance sheets (with schedules), certified by a CA(both personal and business) iv. Bank account statements (current and savings accounts) for the last 1 year v. Qualification Proof of professionals |
| Self Employed: Non-Professionals | i. Latest 2 years ITRs with computation for individual applicants and co-applicants (if borrower is an individual) ii. Bank account statements (current and savings accounts) for the last 1 year iii. Latest 2 years of audited/CA-certified profit & loss accounts and balance sheets of the firm/company (if borrower is a firm/company) iv. Proof of Business (GST / Shop Establishment/Udayam Aadhar, etc.) v. MOA & AOA & Certificate of Incorporation vi. For Partnership Firm-Partnership Deed |
Other documents to be provided as required for disbursement of Loan
Apply for Loan Against Property with these steps
1. Apply Online in Minutes:
Click on "Apply Now" and fill in the form with your personal details and other relevant information
2. Connect with our representative
Our representative will contact you with the details of the loan offer and collect your documents
3. Eligibility and Document check
Your eligibility will be checked and documents will be verified before processing the loan
4. Configure your mode of repayments
You can select your repayment mode and set up a convenient EMI payment schedule
5. Get Loan Disbursement:
Receive the loan amount directly into your account, ensuring convenient and smooth access to funds
When planning to secure a Mortgage Loan, understanding the different types available can help you choose the right financing option based on your needs:
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