Dev Singhraha
Relocation Expert
Often people get confused between the home loan and mortgage loan. As similar these sounds, they both are very different from each other and serve a different purpose. To make an absolute difference, the home loan is specifically given out to buy the property while the mortgage loan can be given out to buy anything.

To explain it further, all home loans are mortgage loans, but all mortgage loans are not home loans. To avail a loan, you have to put something collateral against it. In case of a home loan, you put the property that you are buying, as collateral which makes it a mortgage loan. But you can only purchase a property in case of a home loan. In case of a mortgage loan, you can put any of your belonging or property and get a loan equivalent to the amount of collateral.

Since, with the mortgage loans, you can buy anything that you want to, the interest rate for the same is higher. The terms and nature for home loans are preset which is not the same with mortgage loans.

In case of home loans, the banks pay the entire loan amount to the seller or the builder. This is the way to make sure that the funds are used only to buy the property. The same is not true in case of a mortgage loan. The bank will transfer the fund to the buyer’s account, and they can then use it for their personal use.

The interest rate of home loans is lower as compared to mortgage loans or the loan against property. Till last year, the home loan interest rate offered by State Bank of India was 9.20 percent. The loan against property offered by SBI was anything between 10.77 and 11.75 percent. The amount of loan that the borrower takes determines the interest rate, while it is not the same in case of a home loan.

Both mortgage loan and home loans also come with different tax advantages. There is no tax benefit for the salaried employees while paying the mortgage loan. The same is not a provision for home loans. Also, for the home loan of up to Rs 28 lacs fall under the purview of priority sector lending. It is not the same for the mortgage loan.

Both home loan and mortgage loan are designed to serve different task. When approaching to take either one of them, it is better to do proper research and make sure the loan you are taking works in your favour and does not affect your financial standing adversely. 
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