Hey,
Property prices are skyrocketing in India. Everything is getting more expensive day by day. Most people, including me, have to look for external financing to afford the property they like. There are banks that give home loans but I have mixed feelings about it. To help myself out, I conducted a comparison of mortgage loan vs home loan. Keep reading to know more.
What is the difference between home loan and mortgage loan ? Home Loan :
Here a borrower takes a loan for buying a home from the bank. Home loans are taken for renovating an old house as well. The loan is given on the basis of the present market value of the property.
Mortgage Loan :This loan can be taken from an institution with no restriction on how the amount can be used. You can use it to buy a car, settle old loans, etc. The loan is given on the basis of the collateral’s current market value.
Here is difference between home loan and mortgage loan :Home loan |
Mortgage loan |
|
Purpose |
Only taken for construction of a new home or to purchase a ready-to-move-in flat. |
There is no restriction on how the loan can be used. Personal requirements as well as business requirements can be fulfilled. |
Loan to value ratio |
You can get home loan for 90% of the property's current market value |
You can get mortgage loan on 60% to 70% of the property's complete market value |
Interest rate |
Lower in comparison to mortgage loans |
Mortgage loan interest rates higher in comparison to home loans |
Processing fee |
Usually it is 0.8% to 1.2% of the loan amount |
Usually, it is 1.5% of the loan amount |
Repayment tenor |
You will have to pay back the amount in 30 years |
You will have to pay back the amount in 15 years |
Now that you know the differences, let me share a similarity between both the forms of borrowing. Home loan and mortgage loan are secured loans. A customer needs to provide with collateral to avail the loan from the lender.
Before the repayment of the loan is complete in both cases, the lender has the complete ownership. As soon as the loan is paid back in full along with interest, the ownership returns to the customer.
This is all from my end on mortgage loan vs home loan.
If you want help with getting the best loan. Check out NoBroker Loan Services.
Read more :
What is LOD in home loan ?
How to Increase Tenure of Home Loan?
Home Loan Comes Under Which Section?
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What is the difference between home loan and mortgage loan ?
Om
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2 Year
2022-05-17T09:54:45+00:00 2022-05-17T09:54:46+00:00Comment
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