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Query: What is the difference between Home Loan & Mortgage Loan or Loan against Property

Category: Finance

Answer: Following are the differences between home loan & loan against property (Mortgage Loan): - 1. Home Loan is given for the purpose of purchase of new house property or construction or improvements of a house property. While Mortgage loan can be used for any purpose like business, personal, buying a property etc. 2. In case of home loan your new proposed house to be purchased or constructed is kept as security until your loan is repaid, but in case of loan against property, your existing owned property or specified movable assets are kept as security. 3. Interest rates on home loan are quite lesser than the interest rates on loan against property. 4. In case of Home Loan, generally money is directly disbursed directly to the seller or builder. But in case of loan against property, loan amount can be disbursed to the account of borrower. 5. In case of default of home loan for under construction properties, banks find difficulty in recovering the amount as it is difficult to liquidate property under construction, but in case of mortgage loan, since loan is against existing saleable properties or assets, it is easy for the bank to liquidate the assets for recovering their loan.

Date Posted 26-Jan-2020
Posted By Kumar Prakash
Views: 340

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