Out of all types of loans, property, or home-related loans are the most popular. Sometimes, people get confused between the two, because of the similarity in nomenclature.
Purpose
A Home Loan is used to buy a property. You may use the home loan amount for buying or constructing a house.
A Loan Against Property is a loan where the applicant mortgages an existing residential or commercial property for getting a loan. Since, unlike home loans, your property is the collateral guarantee in LAP, the loan amount and repayment tenure is higher.
Eligibility and Loan Amount
The loan against property eligibility is more comfortable than a home loan.
The amount you are eligible to receive on a home loan depends on multiple factors like age, the stability of income, CIBIL score, disposable income, and credit history. A home loan may give you up to 90% of the property's value.
A loan against property is almost entirely dependant on the valuation and legal status of the property you wish to mortgage. Although credit history and income details are essential, they are often just a formality. You can receive up to 60% of your property's market value as a loan.
Conclusion
A home loan would suit you best if you are a first time home buyer. If, however, you already own a property and would like to encash its real value, then go for a loan against property.
The most significant advantage of a loan against property is that you may use it for any purpose you like.
Read More:
Things to keep in mind before taking a loan against property
5 Things You Should Know Before Taking Mortgage Loan
Purpose
A Home Loan is used to buy a property. You may use the home loan amount for buying or constructing a house.
A Loan Against Property is a loan where the applicant mortgages an existing residential or commercial property for getting a loan. Since, unlike home loans, your property is the collateral guarantee in LAP, the loan amount and repayment tenure is higher.
Eligibility and Loan Amount
The loan against property eligibility is more comfortable than a home loan.
The amount you are eligible to receive on a home loan depends on multiple factors like age, the stability of income, CIBIL score, disposable income, and credit history. A home loan may give you up to 90% of the property's value.
A loan against property is almost entirely dependant on the valuation and legal status of the property you wish to mortgage. Although credit history and income details are essential, they are often just a formality. You can receive up to 60% of your property's market value as a loan.
Conclusion
A home loan would suit you best if you are a first time home buyer. If, however, you already own a property and would like to encash its real value, then go for a loan against property.
The most significant advantage of a loan against property is that you may use it for any purpose you like.
Read More:
Things to keep in mind before taking a loan against property
5 Things You Should Know Before Taking Mortgage Loan
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