Difference between home loan and mortgage loan
A home loan provides funding to help you upgrade, construct, or buy a residential property. Lenders consider the home or the property as the collateral for the loan. Mortgage loans on the other hand are loans that are taken against a property collateral, i.e. loan against properties.
Additional Read: Know about different types of Home Loans
Home loan interest rates
People mostly avail of home loans for buying a house or a flat. However, they may also avail home loans for buying a plot of land for constructing their house. Other reasons for taking a home loan may be for extending, renovating, or repairing their existing flat or house. Applicants for home loans have to pay back at adjustable or fixed interest rates and other payment terms set by the bank or non-banking financial company.
About mortgage loan
A mortgage loan can refer to a home loan or commonly, it can refer to a loan obtained for any purpose by offering property (residential or commercial) as collateral. In the latter sense, it is often called a loan against property and interestingly, the security for a mortgage loan can even be an immovable asset like heavy machinery.
Benefits of mortgage loan
Banks and non-banking financial companies offer several types of mortgage loans.
Fixed rate mortgage
In this type of loan, the bank keeps the interest rate fixed for the entire tenure of the loan.
Adjustable rate mortgage
In this type of loan, the bank keeps the interest rate fixed for a specific period, and after that period, they adjust if periodically according to market fluctuations.
Frequently asked questions
A mortgage is a financial contract involving real estate, serving as collateral for a loan, while a home loan is a type of mortgage specifically used for purchasing residential properties. In essence, a home loan is a subset of mortgages, designed for buying homes.
The choice between a home loan and a mortgage depends on your specific real estate objectives. If your primary aim is to buy a home for personal use, a home loan is usually the better option. If you have a broader range of real estate financing needs, a mortgage offers more flexibility. It's crucial to assess your individual circumstances and consult with a financial advisor or lender to determine which option is the most suitable for you.
