Embarking on the journey to homeownership involves navigating through various financial instruments. Among these, home loans and mortgage loans are terms often used interchangeably, but they represent distinct aspects of property financing. Understanding the differences is crucial for anyone venturing into the realm of real estate finance.

1. Home Loan: Your Path to Property Ownership

A home loan is a financial product designed to help individuals or families purchase a residential property. This loan can cover various expenses related to property acquisition, including the property’s cost, registration fees, and stamp duty.

Key Features

  • Purpose: Primarily for buying a residential property.
  • Collateral: The property being purchased serves as collateral.
  • Applicability: Available for both new and resale properties.
  • Flexibility: Can be used for home construction or renovation.


Home loans usually come with a repayment tenure ranging from 15 to 30 years. Monthly instalments consist of both principal and interest components, with interest rates varying based on market conditions and the borrower’s creditworthiness. A great way to create your repayment strategy is to use online EMI calculators that can help you compute your EMIs instantly. 

2. Mortgage Loan: Tapping into Property Equity


mortgage loan, on the other hand, is a loan secured against an existing property’s equity. Homeowners can leverage the value of their property to meet various financial needs, such as funding education, business expansion, or home renovations.

Key Features

  • Purpose: Allows homeowners to unlock the equity in their property
  • Collateral: The property owned by the borrower acts as collateral
  • Applicability: Only applicable to properties with substantial equity
  • Flexibility: Can be used for any purpose, not limited to real estate


Mortgage loans often have shorter tenures than home loans, typically ranging from 5 to 15 years. Interest rates may vary based on the borrower’s credit score and the loan amount relative to the property’s value.

Key Differences

Here are some distinct differences between home loans and mortgage loans to help you understand the concepts better:

1. Purpose

  • Home Loan: Specifically for purchasing or constructing a residential property
  • Mortgage Loan: Provides liquidity by leveraging existing property equity for various financial needs

2. Collateral

  • Home Loan: The property being financed is the collateral
  • Mortgage Loan: The property owned by the borrower serves as collateral

3. Applicability

  • Home Loan: Applicable for buying new or resale residential properties
  • Mortgage Loan: Available to homeowners with substantial equity in their property

4. Usage

  • Home Loan: Focuses on real estate transactions
  • Mortgage Loan: Offers flexibility for diverse financial requirements

5. Tenure

  • Home Loan: Longer repayment tenure, often ranging from 15 to 30 years
  • Mortgage Loan: Shorter repayment tenure, typically between 5 to 15 years


In essence, while both home loans and mortgage loans involve property as collateral, their purposes and structures differ significantly. Home loans cater specifically to property acquisition, providing a structured approach to homeownership. On the other hand, mortgage loans allow property owners to leverage their real estate assets for diverse financial goals.

Understanding these distinctions empowers individuals to make informed decisions based on their specific needs and financial circumstances.