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A housing loan is a secured loan, which means you do not have to provide any additional security. However, once you have selected the property and apply for a home loan, you will have to submit the property deeds to the lender as collateral. The property's title deed is considered the first mortgage and is held by the bank as security against the loan. Once you have repaid the loan in full, the bank returns the title deed along with the NOC (No Objection Certificate).
Additional Read: Differences between Secured and Unsecured Loans.
Security for PNB Housing Loan
PNB Housing requires the first mortgage (title deed) as security for a home loan. The title deed is held by the bank until you repay the loan completely.
Additionally, PNB Housing may require you to provide interim/additional security if needed, though this isn't necessary in most cases. For example, if the title deed is not yet registered in your name, but the bank has disbursed the loan amount, you may have to provide interim security until you get the property deed.
Few Points to Know about Security for a Housing Loan
It's a standard practice for the lender to hold the property deeds till you repay the home loan. The bank usually does a background check to verify if the property is legal and there are no other complications around it. The bank sees your property as security against that loan. If in the worst case, you're unable to repay the loan on time, the bank can auction your property to recover the costs of the loan.
If you’re uncomfortable with the bank holding your property documents, make sure to repay the loan quickly so that you can claim the documents as early as possible.
Extra Read: The CreditMantri Guide to Home Loans