Among various financial products available in the market, one may often confuse between a home loan and availing of a loan against property. This confusion takes place due to similar features and benefits. Nonetheless, to clear up things, let’s understand the major differences between these two credit options.
Top 3 differences between LAP and home loan
Here are some significant differences between a home loan and property loan in India:
- Loan quantum
When applying for a home loan, borrowers can avail funds of up to 90% of the property’s value. On the other hand, the maximum loan amount sanctioned for a loan against property is up to 75% based on the property’s market worth.
- Loan purpose
Usually, home loans are availed for the purpose of purchasing a plot, home or under construction property. While availing of a loan against property involves meeting varied personal and professional requirements.
- Loan tenor
The repayment tenor of both the loans is significant. Ideally, the repayment tenor for home loans can go up to 30 years, while for a property loan; the repayment tenor lasts for up to 15-18 years.
However, selecting the tenor based on the requirements will decide the home loan and property loan EMIs.
Apart from these, borrowers must note that, unlike home loans, there is no property loan tax benefit.
Now that borrowers know home loans and LAPs are not entirely similar, they can compare and prioritise based on their requirements. However, before availing of a loan against property or home loan, borrowers must check the additional costs involved.
