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In summary
Understanding Home Loan
In everyday Indian usage, "home loan" and "mortgage loan" are often used interchangeably, but they are not the same. Understanding the distinction helps you choose the right product for your financial need.
This page covers:
- What a home loan is and what it can be used for
- What is a mortgage loan (loan against property)
- Key differences: 10-point comparison
- Types of home loans and mortgage loans
- When to choose a home loan vs a mortgage
- Interest rates, LTV, and tenure comparison
- Tax benefits: home loan vs. mortgage
- How to apply
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What is a home loan?
A home loan is a secured loan provided by banks and housing finance companies specifically to fund the purchase, construction, or renovation of residential property. The property being financed serves as collateral. Home loans are tightly regulated: the loan amount, LTV ratio, and usage are governed by RBI guidelines.
Bajaj Finance offers home loans from 7.25% p.a.** with amounts up to Rs. 15 Crore* and tenures up to 32 years for purchase, construction, renovation, or extension of a residential property.
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Key facts at a glance (Updated: April 2026)
| Parameter | Detail |
|---|---|
| Loan Amount | Rs. 1 lakh to Rs. 15 Crore*, |
| Interest Rate | Starting from 7.25% p.a.* |
| Balance Transfer Rate | Starting from 7.30% p.a.* |
| Repayment Tenure | Up to 32 years |
| Maximum LTV (Loan-to-Value) | Up to 90% of property value (as per RBI guidelines) |
| Minimum CIBIL Score | 725 or above (recommended) |
| Eligible Applicants | Salaried, self-employed professionals |
| Salaried Applicant Age | 23 years to 67 years |
| Self-Employed Applicant Age | 23 years to 70 years |
| Tax Benefit on Interest | Up to Rs. 2 lakh/year under Section 24(b) |
| Tax Benefit on Principal | Up to Rs. 1.5 lakh/year under Section 80C |
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What is a mortgage loan?
A mortgage loan, commonly called a Loan Against Property (LAP), is a secured loan where you pledge an existing owned property (residential or commercial) as collateral to borrow funds for any purpose. Unlike a home loan, there is no restriction on end-use: the borrowed funds can be used for business expansion, education, medical emergencies, or any other personal or professional need.
The term "mortgage" technically refers to any loan where property is the collateral. In India, a home loan is a specific type of mortgage; but when people say "mortgage loan", they typically mean a loan against property.
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Key differences between home loan and mortgage loan
| Parameter | Home loan | Mortgage loan (LAP) |
|---|---|---|
| Purpose | Purchase, construction, or renovation of residential property | Any purpose: business, education, medical, personal |
| Property used as collateral | The property being purchased/ constructed | An existing owned property |
| Interest rate | Lower: 7.25% p.a.** onwards | Higher: typically 9% to 14% p.a. |
| Loan amount | Up to 75-80% of property value (LTV) | Up to 50-70% of property value (LTV) |
| Tenure | Up to 32 years | Typically up to 15 years |
| End-use restriction | Yes: only for residential property purposes | None: any legal purpose |
| Tax benefits | Section 80C (principal), Section 24(b) (interest), Section 80EE/80EEA | Section 24(b) on interest if used for property; no 80C benefit |
| Processing | Includes property legal and technical check | Same |
| Applicable to | Purchase, construction, renovation, extension | Any owned property (residential or commercial) |
| Regulated by | NHB/ RBI (strictly for housing) | RBI (flexible end-use) |
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Home loan for professionals
What are the types of home loans?
- Purchase loan: For buying a ready-to-move-in or under-construction residential property
- Construction loan: For building a home on a plot you own; disbursed in stages
- Renovation/ Extension loan: For improving, extending, or renovating an existing home
- Balance transfer: Transfer an existing home loan to a new lender at a lower rate
- Top-up loan: Additional financing over an existing home loan at home loan rates
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What are the types of mortgage (loan against property)?
- Residential LAP: Pledge your owned house or apartment
- Commercial LAP: Pledge your office, shop, or commercial property
- Industrial LAP: Pledge industrial property or warehouses
- Fixed rate mortgage: Interest rate locked for the entire tenure
- Adjustable rate mortgage: Rate fixed initially, then adjusted periodically based on market rates
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When should you choose a home loan vs. a mortgage loan?
| Situation | Best product |
|---|---|
| Buying your first home | Home loan: lower rate, tax benefits, purpose-built product |
| Constructing on owned land | Home construction loan |
| Renovating your existing home | Home renovation loan or top-up loan |
| Need funds for business, education, or medical | Loan against property (mortgage loan) |
| Already have a home loan at a high rate | Balance transfer home loan |
| Need additional funds alongside a balance transfer | Top-up loan |
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Interest rate and LTV comparison
| Parameter | Home loan | Loan against property |
|---|---|---|
| Interest rate | From 7.25% p.a.** | Typically 9% to 14% p.a. |
| Maximum LTV | Up to 80% (loans below Rs. 30 lakh) | Up to 50-70% |
| Tenure | Up to 32 years | Up to 32 years |
The lower rate on home loans exists because the loan funds the purchase of the collateral itself, giving the lender better security and regulatory predictability.
Tax benefits — home loan vs. mortgage
| Tax provision | Home loan | Mortgage/ LAP |
|---|---|---|
| Section 80C (principal) | Up to Rs. 1.5 lakh per year | Not available |
| Section 24(b) (interest) | Only if used for home construction or purchase | Only if used for home construction or purchase |
| Section 80EE/ 80EEA | Up to Rs. 50,000/ Rs. 1.50 lakh for eligible first-time buyers | Not available |
Home loans offer significantly better tax efficiency than mortgage loans.
Understanding the difference between a home loan and a mortgage loan helps you select the right product for your need and maximise tax efficiency. For purchasing or constructing a residential property, Bajaj Finance offers home loans from 7.25% p.a.** with amounts up to Rs. 15 Crore* and tenures up to 32 years. Check your eligibility today.
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What are benefits of home loan?
Home loans offer numerous advantages, including the opportunity to own a home with a lower initial cost, tax benefits, low-interest rates, flexible repayment options, and the potential for property appreciation and wealth building. They provide financial stability, access to property value, and may improve creditworthiness. However, borrowers should also be aware of their responsibilities and potential risks associated with home loans.
Is a home loan and a mortgage the same thing?
Technically, a home loan is a type of mortgage — all home loans are mortgages, but not all mortgages are home loans. In India, the term "mortgage loan" typically refers to a Loan Against Property (LAP), where you borrow against an existing owned property for any purpose. A home loan is specifically for purchasing or building a residential property.
Which is better - home loan or a mortgage loan?
If you are buying or constructing a residential property, a home loan is almost always the better choice, offering lower interest rate, longer tenure, and significant tax benefits. If you need funds for any other purpose (business, medical, education) and own property, a loan against property offers flexibility but at a higher rate. Choose based on your specific need.
What are the tax benefits on home loans?
Home loan tax benefits include deductions on principal repayment under Section 80C and interest payments under Section 24(b) of the Income Tax Act. First-time homebuyers may also avail additional deductions under Section 80EE. These benefits can significantly reduce your taxable income, making homeownership more affordable.
How do lenders determine home loan rate of Interest?
Lenders determine the home loan interest rate based on several factors, including the borrower’s credit score, loan amount, repayment tenure, and prevailing market rates. Additionally, the type of property and the borrower’s income stability also influence the interest rate offered, ensuring a tailored approach to each application.
Can you get both a home loan and a loan against property simultaneously?
Yes, subject to your income and FOIR (Fixed Obligation to Income Ratio). Lenders assess your total monthly EMI obligations across all active loans against your income. If your FOIR remains within acceptable limits (typically 50-60% of take-home pay), you can have both products active simultaneously.
Who is eligible for a home loan?
To qualify for a Bajaj Finance Home Loan, applicants must generally be between 23 years and 67 years old (salaried) or 70 years (self-employed), have a stable income, a good credit score, and manageable existing debts. Both salaried and self-employed individuals can apply. Your income level, employment stability, credit history, and repayment capacity together determine your eligibility and the maximum loan amount you can access.
What happens if you default on a mortgage loan?
Whether it is a home loan or a loan against property, the lender holds the property as collateral. In the event of default, the lender can initiate recovery proceedings under the SARFAESI Act and eventually auction the mortgaged property to recover the outstanding amount. Maintaining timely EMI payments is essential to protect your property.
Does Bajaj Finance offer 100% home loans?
No, Bajaj Finance, like all financial institutions, cannot provide 100% financing for a home loan. In line with RBI guidelines, the maximum amount you can borrow is typically up to 90% of the property’s value. The remaining cost must be covered through your own contribution, which ensures you have a financial stake in the property and reduces borrowing risk.
What do our customers say about us
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Amit Shiva
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Smooth and transparent home loan process. The interest rates were competitive, and documentation was minimal. The team guided me clearly at every step, making my first home purchase stress-free. Highly recommended for quick approvals.
Sandeep Kulkarni
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The loan disbursal was fast, and the customer support team was extremely patient with all my queries. Flexible EMIs helped me manage my monthly expenses easily. A great experience for salaried homebuyers.
Ritika Agarwal
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I had a great experience while transferring my existing home loan. The process was quick, and I saved significantly with the lower interest rate. Customer service was helpful throughout. Highly recommended for balance transfers.
Manoj Verghese
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Clear guidance, quick approval, and flexible repayment options made buying my new house easier than expected. The team handled everything professionally. Very satisfied and would definitely recommend their home loans
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