Mortgage Loan vs Personal Loan: Key Difference

Updated on: 21 Jan 2026

The main difference between a mortgage loan vs personal loan is simple. A mortgage loan is a secured loan backed by property, while a personal loan is unsecured and can be used for many personal needs. This one decision affects your interest rate, loan amount and repayment period as a borrower.

If you are confused about the difference between personal loan and mortgage, understanding how each option works can help you choose the right loan for your situation.

Understanding Personal Loans

A personal loan is an unsecured loan. You do not need to pledge any assets to borrow money. Approval depends on your credit score, income, employment stability and repayment history.

You can use a personal loan for almost any purpose. This includes medical expenses, travel, home renovation, education or debt consolidation. Since there is no collateral involved, personal loans usually have higher interest rates, but they are approved faster and offer quick access to funds.

Understanding Mortgage Loans

Mortgage loans are secured loans where you use your property as collateral. This is what mainly sets it apart from other types of loans. The loan amount is based on the property’s value, location and overall condition.

Since an asset backs the loan, mortgage loans usually offer lower interest rates and longer repayment tenures. This makes them a better fit for large funding needs and long-term financial planning.

Comparison: Mortgage Loan vs. Personal Loan

Here is a quick table that highlights the difference between loan and mortgage, so you can compare both options easily.

Aspect	Personal Loan	Mortgage Loan
Nature of the loan	Unsecured. No collateral required.	Secured. Property is pledged as collateral.
Loan amount	Based on income and repayment capacity. Usually ranges from ₹50,000 to ₹40 lakhs.	Generally, 60-80% of the property’s market value. Can go up to crores for high-value properties.
Repayment tenure	Short to medium term.	Long term. Can extend up to 30 years.
Mortgage loan vs personal loan interest rate	Higher due to higher risk for the lender. Usually between 10-24% p.a.	Lower due to collateral. Usually between 7-14% per year.
Usage flexibility	Very flexible. Can be used for medical needs, travel, renovation, education or emergencies.	Mostly used for real estate needs, refinancing or a loan against property.
Credit score impact	Credit score plays a major role in approval and interest rate.	Credit score is considered, but property value also matters.
Processing time	Faster approval with minimal documentation.	Slower processing due to property verification and legal checks.
Tax benefits	No direct tax benefits in most cases.	Tax benefits are available under Sections 80C and 24 of the Income Tax Act.

This table makes it easier to see the difference between personal loan and mortgage and understand how a loan vs mortgage works in real life.

When to Choose Which: Personal loan vs mortgage

Choose a mortgage loan

If you are buying property, need a large amount, want lower interest rates and are comfortable pledging property for a long period.

Choose a personal loan

If you need funds quickly, want flexible usage, do not want to risk any asset and prefer a shorter repayment tenure.

Why Are Personal Loan Rates Higher Than a Mortgage?

This is why mortgage loan vs personal loan interest rates differ:

Personal loans are unsecured, so lenders take a higher risk
Higher risk leads to higher interest rates
Mortgage loans are secured by property
Lower risk allows lenders to offer lower interest rates

Now that you understand the difference between loan and mortgage, you can decide what works best for you. If a personal loan suits your needs better, consider Fibe’s Instant Cash Loan. You can get up to ₹10 lakhs with quick approval and minimal documentation.

Apply through the Fibe Personal Loan App or website to get started!

FAQs on mortgage loan vs personal loan

Which is better mortgage loan or a personal loan?

Deciding between personal loan vs mortgage loan requires a thorough assessment of several factors. Some of these are:

Purpose of the loan
Availability of security
Tenure and cost

Is a mortgage loan good or bad?

A mortgage loan is neither good nor bad on its own. It works well if you need a large amount at lower interest rates and are comfortable using property as collateral.

Why does a mortgage loan usually have a lower interest rate than a personal loan?

Mortgage loans are backed by property, which lowers the lender’s risk. Personal loans are unsecured, so lenders charge higher interest rates to cover the added risk. This is one of the key difference between loan and mortgage.