When it comes to financing a property, many people use the terms mortgage loan and home loan interchangeably. However, they are not the same. While both involve borrowing money against property, they serve different purposes. In this article, we’ll break down the key differences between mortgage loans and home loans to help you make an informed financial decision.
A home loan is a type of loan used specifically to purchase or construct a residential property. The lender provides funds to buy a new home, and the borrower repays the amount in equated monthly installments (EMIs) over a fixed period.
A mortgage loan, often called a loan against property (LAP), is a secured loan where a borrower pledges an existing property to get funds. This type of loan is used for various financial needs such as business expansion, medical expenses, or debt consolidation.
| Feature | Home Loan | Mortgage Loan |
|---|---|---|
| Purpose | Buying or constructing a home | Any personal or business need |
| Loan Amount | Up to 80-90% of property value | Up to 50-70% of property value |
| Interest Rate | Lower | Higher |
| Tenure | Up to 30 years | Up to 15 years |
| Tax Benefits | Available under Section 80C & 24(b) | Limited tax benefits |