Personal Loan

Know the Key Points Between an Education Loan And Mortgage Loan


With the growth in the financial market, many banks and NFBCs are offering different types of loans. The type of loan you get depends on your requirements. This article will walk you through two types of loans—an education loan and a mortgage loan—and their differences.

An education loan is an unsecured loan borrowed to finance higher education. On the other hand, a mortgage loan is a secured loan offered against collateral and can be used for various purposes like funding your child’s education, renovating your house, etc. Read on to know how these two loans differ.

Education vs Mortgage Loan: Key Differences

Here are the 7 key differences between mortgage loans and education loans.

1. Meaning

A mortgage loan is a type of secured loan that provides funds in exchange for an immovable asset, such as a house or a piece of real estate. Until you repay the loan, your lender will hold this asset as collateral. It is a contract between you and your lender, in which you provide consent to the lender’s right to repossess your asset if you fail to repay the loan. 

An education loan is an unsecured loan, which means that it is often provided without any collateral in exchange. It is a sum of money that is borrowed to fund higher education expenses. Many banks and NFBCs offer education loans to college-going students. 

2. Usage

You can use a mortgage loan for a range of purposes like

  • Financing an urgent medical need
  • Paying for the higher education of your children
  • Paying for the wedding of your children
  • Growing your business
  • Renovating a house

On the other hand, you can use the sum of an education loan only to pay for your tuition fee and other educational expenses.

3. Loan-to-Value Ratio

The amount you get from a loan as compared to the actual worth of property (collateral for a mortgage loan) and course fees (for an education loan) is known as the loan-to-value ratio.

Typically, banks and NFBCs offer 60%-70% of the property’s market value in a mortgage loan. In the case of education loans, lenders provide the borrower with the complete sum that pursuing their education might need. The fees may also include tuition fees, accommodation charges, etc. 

4. Repayment Schedule

In both a mortgage loan and an education loan, you pay the loan amount back in the form of EMIs. The EMI amount is generally decided beforehand. In most cases, banks suggest you the best EMI amount based on your monthly income. But you can even negotiate the EMI amount as per your repayment ability.

In a mortgage loan, the repayment schedule begins as soon as the loan amount is transferred to your registered bank account. For instance, if you took a loan at the start or middle of the month, the bank will set a date in the following month for the EMI payments. 

But the borrower of an education loan is a student with no source of income. That is why the repayment is scheduled to begin after the course completion for which the loan was taken. Also, lenders do not ask for repayment right after the course completion; instead, they offer six months grace period to find a job. Once you find a job within the grace period, the repayment cycle begins through EMI. If a salaried person opts for an education loan, the repayment schedule is the same as for a mortgage loan

5. Repayment Tenure

The repayment tenure for a mortgage loan can go up to 15 years, as they are offered against collateral. For education loans, the tenure goes up to 8 years. But the tenure varies from lender to lender.

6. Disbursal of Loan Amount

For mortgage loans, the lenders disburse the loan amount into the borrower’s registered bank account after the approval of the loan. And the borrower is free is use that sum for any purpose. 

In the case of education loans, the loan amount is not directly handed over to the borrower or transferred to their bank account. Instead, the lenders transfer the loan amount directly to the account of the educational institution from where they will study. 

7. Tax Benefit

According to Section 24(B) of the Income Tax Act, salaried people can benefit from the income tax deduction for mortgage loans (also known as loans against property). If you use the loan amount to finance a new house or house renovation, you may file for a tax return of up to ₹2 lacs you paid as loan interest.

As soon as you begin making repayments for an education loan, you can use Section 80E of the Income Tax Act to claim a deduction in the interest you pay each month. However, the deduction is not allowed on principal repayments. 

Benefits of Applying for a Loan at Piramal Finance

The following are the benefits of applying for a loan at Piramal Finance:

  • Little to no charges for foreclosure and early payments
  • Minimal documentation
  • Smooth process with quick approvals and disbursals
  • Affordable monthly EMIs
  • Flexible repayment terms, with the tenure ranging from one to five years
  • Combined incomes for maximised loan eligibility
  • Accessible to both salaried and self-employed individuals


Both mortgage loans and education loans serve different purposes. If you wish to pay for your education in India or abroad, get an education loan. It is simple to obtain and does not need collateral. However, go for a mortgage loan if you want to fund an urgent medical bill, pay for your wedding, expand your business, or renovate your home.

To acquire a loan from Piramal Finance, apply here or call 1800 266 644. With Piramal Finance, you can be sure of personalised customer service and customised loan plans. You can also check out other such articles and financial products and services on their website.