Types of Loan: Home loan, Mortgage loan and Loan against property

When it comes to availing loans for either business or personal use, you may come across three types of loans: home loans, mortgage loans, and loans against property. These loans will leave you confused if you are new to the financial market. Although every loan is offered against an immovable asset, be it a house, plot, or commercial property, each one has its own eligibility criteria, repayment tenure, interest rates, and so on.

You must understand the key differences between the three loans so that you can choose one according to your needs. Continue reading to learn more about these distinctions and how to find the best loan for you.

What is a home loan?

A home loan is a secured loan that provides you with sufficient funds so that you can buy or construct your dream house. The banks or financial institutions offer a home loan by keeping your property (the one against which the loan is sanctioned) as collateral. Home loans are funded at affordable interest rates and usually have a long repayment tenure.

You are supposed to repay the loan amount through equated monthly instalments (EMIs). Once the entire loan amount is repaid, the lender hands you back the title to the property.

What is a mortgage loan?

A mortgage loan is a secured loan that provides you with funds against an immovable asset like a house or commercial property. The bank or other lender will keep this fixed asset as collateral until you have paid back the loan in full.

A mortgage loan is more like an agreement between you and your lender under which you agree to allow the lender to take over your property if you fail to repay the loan amount plus interest. You can use a mortgage loan to buy a property or borrow money against the value of a home you already own.

What is a loan against property?

A loan against property (LAP) is a secured loan sanctioned against your property by keeping it as collateral. The property may be residential, commercial, or industrial. The property continues to be held as collateral by the lender until the total amount of the loan against the property is repaid. LAP is a loan that benefits both businesses and individuals.

Banks or other financial institutions usually offer loans against property at a much lower interest rate than any other unsecured loan. Businesses use this loan to pay suppliers or salaries, keep goods stocked to keep up with rising demand, or pay for operating costs.

Key Differences Between a Home Loan, a Mortgage Loan, and a Loan Against Property.

Read on to understand the key differences between all three loans—home loan, mortgage loan, and loan against property (LAP)—based on purpose, loan-to-value ratio, and repayment tenure.

	Home loan mortgage.	Mortgage loan.	Loan against property.
Purpose.	To purchase a plot or ready-to-move-in property. Or for the construction of a house or commercial property.	No restriction on the usage of the loan amount. Both individual and business requirements can be met.	For both business purposes and personal use.
Loan-to-value ratio.	Up to 90% of the property value.	Up to 60–70% of the property’s market value.	Up to 60% of the property value.
Repayment Tenure.	Up to 30 years.	Up to 15 years.	Up to 15 years.

Wondering where to get these loans?

After knowing all the key differences between the three loans, you must be wondering where to get these loans with quick application procedures and no hassle. Right? Piramal Finance offers hassle-free home loans and loans against property with minimal documentation and favourable interest rates. Continue reading to learn why you should choose Piramal Finance.

Features of Applying for a Loan at Piramal Finance

Piramal Finance offers you a loan with no hassle that is worth a try. Read the benefits of applying for a loan at Piramal Finance.

• There are little to no fees for early repayment or foreclosure.
• Minimal documentation.
• Smooth process with quick sanctioning and disbursals.
• Easy monthly EMIs that fit your pocket
• Flexible tenure of repayment from 1 year to 5 years.
• Combining incomes of family members to increase loan eligibility.
• High eligibility; the maximum loan amount
• Loans are available for both salaried as well as self-employed individuals.

Home Loans and Loans Against Property at Piramal Finance.

You can avail yourself of a hassle-free loan with minimal documents and a prompt application procedure at Piramal Finance. Piramal Finance offers a home loan and a loan against property.

The table below shows the eligibility criteria, interest rates, documentation, processing fees, and application of these two loans at Piramal Finance. Please note that Piramal Finance does not offer mortgage loans as of now.

	Home Loan.	Loan Against Property.
Eligibility.	Both salaried and self-employed individuals.	Both salaried and self-employed individuals.
Interest Rates.	Starting at 10.50% p.a. onwards.	Starting at 11.50% p.a. onwards.
Documents.	PAN, identity proof, address proof, income proof, property-related documents, etc.	PAN, identity proof, address proof, income proof, property-related documents, etc.
Processing Fees.	Up to 3% of loan amount+ applicable taxes.	Up to 4% of loan amount+ applicable taxes.
Application Fees.	3500/-+applicable taxes.	3500/-+applicable taxes.

In conclusion

The type of loan depends on your requirements. If you are someone who wishes to buy or construct a house, a home loan is a good option for you. And if you are someone who wants to fulfil both business and personal expenses, then a mortgage loan is a good choice for you. Lastly, if you are a business that wants to pay salaries or buy inventory, go for a loan against property.

Piramal Finance offers you both a home loan and a loan against property at an affordable interest rate and hassle-free repayment tenure. Apply to get a loan right away, or call 1800 266 644 to learn more.