There are several different types of secured property loans in the market, and quite often, it may get confusing to pick the differences in each of them. For the sake of clarity, it must be made clear that even Home Loans are a type of mortgage loan; wherein the property for which you seek a loan is considered a collateral for the sanction. However, through this article, we establish the differences between Home Loans and Loans Against Property – which are commonly referred to as mortgage loans.
The purpose of demarcating the difference is to help borrowers make informed decisions about which loan type is correctly suited to their needs – helping them choose, and then proceed to apply for the right loan, knowing everything it entails.
Bajaj Housing Finance offers both loan types to interested applicants, depending on what their financial need is. Here are the differences between Home Loan and mortgage loan that we offer:
| Parameter | Home Loan | Mortgage Loan |
|---|---|---|
| Purpose | To help in home buying or renovation only | To help address housing or business-related expense, and for debt consolidation |
| Interest Rate | 8.50%* p.a. for salaried applicants | 9.40%* p.a. for salaried and professional applicants |
| Loan Sanction | Rs.5 Crore* or higher, basis eligibility | Rs.5 Crore* or higher, basis eligibility |
| Tenor | Up to 32 years | Up to 17 years |
| Disbursement Time | In 48 Hours* from the time of formal loan approval | In 72 hours* from the time of formal loan approval |
| Part-Prepayment Charges/Foreclosure Charges | No additional charges on part-prepayment or foreclosure for individual borrowers with a floating interest rate Home Loan | Charges are applicable to foreclose or part-prepay Loan Against Property |
| Loan-to-Value Ratio | May go up to 75% to 90% of the property’s value | May go up to 70%* to 75%* of the property’s value |
| Eligibility Criteria | Easy-to-meet and basic; open to salaried, professional, and self-employed applicants | Easy-to-meet and basic; open to salaried, professional, and self-employed applicants |
For a more detailed insight into interest rates attached to both loan types, click here.
Your choice of loan has to depend entirely on what you need the funding for – if it is to buy a house or renovate the one you live in, then a Home Loan is ideal for you, given its low interest rate and sizeable loan sanctions. On the other hand, if you wish to consolidate your debts, expand your business, or repair your house, a Loan Against Property is what you need.
Home Loans and mortgage loans serve different purposes and offer salient features and benefits. Since the end-use of both the loans is different, one cannot compare them. Whatever your need be, borrow from Bajaj Housing Finance to cover your expenses.
*Terms and conditions apply.
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