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.