Difference Between A Home Loan And A Loan Against Property

It is easy to confuse between a home loan and a loan against property as both relate to property, more or less. But, we must understand that both loans are used for slightly different reasons. Therefore, you must firstly list down your needs and priorities to make an informed decision.

What is Home Loan?

• In, home loan, No collateral is needed.
• Loan amount is to be used to purchase a new property, build, renovate, purchase land to build a house or to extend an existing property
• The coveted property is a collateral to the lender until the loan is paid off in full
• You can get 90% of the property value as loan
• Maximum tenure of home loan is up to 30 years
• There is monitoring by lender on utilization of home loan amount
• You can finance your other needs with a high value top-up over your existing home loan, at an affordable interest rate 

What is Loan Against Property?

• You have to pledge your property as collateral for the Loan Against Property
• Loan amount secured can be used for any personal use
• You can secure up to 60% of the loan amount
• Tenure of the loan ranges between 10-15 years
• If loan against property is taken for business purpose, deduction of interest can be applied under ‘income from business and profession’

Ideally, you can easily transfer balance of both loan, with minimal documentation to a new lender and avail high value amount. This process does not take long and is availed at a nominal interest rate.

The loan amount and interest rate will also depend on your individual application and terms of lender. So, check out aggregator sites to learn more about offers from various NBFCs and financial institutions.

Learn more about it over here: Don’t Confuse Between A Home Loan And A Loan Against Property