Home loan vs. Mortgage loan

The difference between these two types of loan is very subtle. Both are against a property you are planning to buy, and the application process remains mostly same.

Home Loan

The money is directly given to the builder or seller. The borrower cannot use it for any other purpose. It's a closed-end transaction. If the borrower defaults, the institution can take back the property. Suitable for those with a 20% down payment ready.

Mortgage Loan

The house is secured to the institution via a legal contract. It provides conditional ownership. The borrower often receives a legal document rather than cash. This works well when there aren't sufficient funds for a down payment, as the institution funds the whole amount by holding the title.

Loan Against Property (LAP)

LAP is open-ended. It’s for people who already own property and use it as collateral for a loan that can be used for any purpose.

Conclusion

In both cases, your home is pledged. As long as you pay EMIs, you get to own the property and enjoy tax exemptions. However, it's a big decision—speak to family and advisors before jumping in.