With a diverse range of loan products available today in the market, it is easy for borrowers to confuse one with another. Most people are usually confused between a home loan and a mortgage loan. To understand the difference between home loan and mortgage loan, refer to the table given below.
Mortgage Loan vs Home Loan
|Basis||Mortgage Loan||Home Loan|
|Purpose||There is no restriction on what the borrower does with the loan amount. It can be used to meet a business requirement or a personal requirement. But the applicant’s property serves as collateral.||A home loan can be availed only for updating an existing residential property, purchasing a property where the borrower can immediately move in or for constructing a new house in an apartment complex or on a piece of land.|
|Loan To Value Ratio||A mortgage loan for 60% to 70% of the market value of the property can be availed.||The home loan amount can be up to 90% of the market value of the property.|
|Interest Rate||Interest rates on mortgage loans are generally 1-3 percentage points higher compared to home loan interest rates.||The interest rate on home loans is low as compared to mortgage loans.|
|Processing Fee||The processing fee for mortgage loans is generally fixed at 1.5% of the total loan value.||Usually, the processing fee on home loans is anywhere between 0.8% to 1.2% of the total loan value.|
|Loan Tenure||The maximum tenure for a mortgage loan is 15 years.||The maximum tenure for a home loan is 30 years.|
Now that we know what is the difference between home loan and mortgage loan, let us look at some of the similarities between the two. Both are secured loans and also offer other services like top-up loans, balance transfer, etc. in accordance with the total loan amount that you are eligible for. However, some lenders may provide these additional services and others may not.
Additional Reads – All You Need To Know About Home Loan Balance Transfer and Top Up Loan
Also, the documentation required to apply for home loans and mortgage loans is more or less, the same. The documents required include:
- Proof of income (latest salary slips for salaried individuals)
- Latest bank account statements (last 3 to 6 months)
- Aadhar card
- PAN card
- Address proof
- IT returns
- Documents pertaining to the property being purchased or mortgaged
So, which is better, a home loan or a mortgage loan? The question cannot be answered definitively as there is a considerable difference between mortgage and loan. What is better for one, may not work as well for someone else. Therefore, you must choose between the two as per your requirements and financial situation.
Additional Reads – Detailed Guide on How to Get Home Loan in India
Whatever your stand is in the mortgage vs loan debate, you can visit Tata Capital for the best home loan and/or mortgage loan solutions. Tata Capital offers home loans at attractive interest rates and with minimal documentation. With years of experience in the industry and dedicated after-sales service and support, Tata Capital is the perfect home loan provider for you. Visit our website for more information and use our home loan EMI calculator.