Difference Between Mortgage Loan And Home Loan
May 25, 2017 Home Loan
it’s been quite a many times that people come across the terms mortgage and home loan. They confuse the two and often are seen using the terms interchangeably; however both the words are completely different from each other.
Let’s have a look at some confusion that people often create.
In order to avail certain amounts of funds from the market, one will have to provide some ‘collateral’. This holds forall kinds of mortgages that are available. Well, home loan is sort of mortgage loan — that implies the loan is sanctioned after a property is given as a collateral. One can of course use other assets as well for collateral while borrowing funds, in mortgage loan the person’s property is what works as a collateral. Most of the house loans in India are the mortgage loans, this implies that the banks has the total right to sell off the person’s property that he/she put up as collateral for all the losses the bank incurs in case the person fails to repay the loan.
Certain pointers which help you know more about the two loans.
1. Home loans tend to have a certain pre-set nature(provided for purchase of any property). The fund acquired through any mortgage loan can be utilized for some other purposes as well. This perhaps is one of the major reasons why a person tends to pay high amount of interest for taking the mortgage loan. In India, the banks while providing on with mortgage loans keeps their property in the form of collateral for providing funds.
2. It must be known, that the interest one pays for the home loan is less than that of mortgage loan. Let us take for example, the State Bank of India tender till the June of last year were providing home loan at the rate of interest of 9.3 percent. For the loan against a property, the interest was charged from 10.7 to 11.7, this depended on the total amount of loan.
3. Bank make a direct payment in the seller’s account directly in case of house loans, this is a technique to make sure that funds which are given are used for house purchasing only. But in case of mortgage loan, the borrower is free in using these funds anywhere they want to. The payment is also given to the borrower directly.
4. On must have in their knowledge that there is no tax benefits while paying mortgage loans for the salaried employees, which is there in a house loan.
Let’s have a look at some confusion that people often create.
In order to avail certain amounts of funds from the market, one will have to provide some ‘collateral’. This holds forall kinds of mortgages that are available. Well, home loan is sort of mortgage loan — that implies the loan is sanctioned after a property is given as a collateral. One can of course use other assets as well for collateral while borrowing funds, in mortgage loan the person’s property is what works as a collateral. Most of the house loans in India are the mortgage loans, this implies that the banks has the total right to sell off the person’s property that he/she put up as collateral for all the losses the bank incurs in case the person fails to repay the loan.
Certain pointers which help you know more about the two loans.
1. Home loans tend to have a certain pre-set nature(provided for purchase of any property). The fund acquired through any mortgage loan can be utilized for some other purposes as well. This perhaps is one of the major reasons why a person tends to pay high amount of interest for taking the mortgage loan. In India, the banks while providing on with mortgage loans keeps their property in the form of collateral for providing funds.
2. It must be known, that the interest one pays for the home loan is less than that of mortgage loan. Let us take for example, the State Bank of India tender till the June of last year were providing home loan at the rate of interest of 9.3 percent. For the loan against a property, the interest was charged from 10.7 to 11.7, this depended on the total amount of loan.
3. Bank make a direct payment in the seller’s account directly in case of house loans, this is a technique to make sure that funds which are given are used for house purchasing only. But in case of mortgage loan, the borrower is free in using these funds anywhere they want to. The payment is also given to the borrower directly.
4. On must have in their knowledge that there is no tax benefits while paying mortgage loans for the salaried employees, which is there in a house loan.
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