If you are planning to purchase your own home with the help of a Home Loan, then you must be aware of certain factors associated with it. When someone borrows money from a financial institution, then he has to mortgage the property or house until he is able to repay the debts. The mortgaged property is a collateral security for the lender, also known as an Interim security. The loan is given on the behalf of this interim security that is the reason it is a secured loan.
Home loan has become a necessity, due to the high prices of properties/flats. However, the ability to repay the loan is crucial. And just to safeguard their investment, which is huge financial institutions exercise the right to keep mortgaged property as collateral property.
There are times when interim security is required essentially.
When your property is under construction: The lender issues the Home Loan to the borrower to continue the construction, but Home Loans are issued on the basis of mortgaging something equivalent to the funds borrowed.
Transfer of Balance: When the borrower shifts to a new bank from the old bank or switches his NBFC.
When you purchase a property: When the borrower purchases a new or an old property, he/she needs to keep house as collateral.