Difference Between Mortgage Loan, Home Loan, and Loan against Property

Difference Between Mortgage loan, Home loan, and Loan against Property.

A mortgage loan, home loan, and loan against property are the terms you come across when looking for loans to fund your needs. All three involve taking a loan by offering your property as security.

Home Loan –

The security offered by you is the home you have purchased. The registration papers stay with the lender Bank till dissolving the loan.

A Mortgage loan and LAP (loan against property)-

These are against an existing asset like gold, or commercial or residential property. You also use this facility when you need urgent liquidity to meet any personal expenses such as
business needs, marriage, medical, etc.
Sometimes when your loan amount is large and not within your paying capacity (as per banks), they can ask for securing your property, as well as the mortgage. Remember to offer a mortgage if the banks refuse a home loan due to low repayment capacity.


When you avail of a home loan for a new property the funds go directly to the builder. The financial institutions offering loan generally takes advanced post-dated cheques.

LAP can be for meeting your requirement of additional funds for any investment. In this case, your property documents stay with the financial institution which deposits funds directly to your bank account.

Note –

  1. Defaults on Loan – For both LAP and home loans, if you fail to pay the financial institution, they have the right to sell your property to secure the loan amount.
  2. Rate of Interest – A home loan has a lower interest rate, whereas LAP has a commercial interest rate and hence is much higher than a home loan.
  3. You also get an incentive to save income tax, in the case of a home loan.