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Loan Against Property vs Home Loan

When you’re in the market for a loan, it can be hard to decide between the various types of lending options available. Do you go for a loan against property or a home loan? How do the two compare and which one is more suitable for your situation?

In this article, we will explore both options in detail, helping you to understand the differences between them and how they both work. We will also look at what might be the best choice for different circumstances, so that you can make an informed decision regarding which option is right for you.

What is a loan against property?

A loan against property is a type of secured loan that allows homeowners to borrow money against the equity in their home. Homeowners can use a loan against property for a variety of purposes, including home improvements, debt consolidation, and major purchases.

Loan against property loans typically have lower interest rates than unsecured loans, making them a more affordable option for borrowers. In addition, because the loan is secured by the equity in your home, lenders may be more willing to approve a loan against property than an unsecured loan.

If you’re considering taking out a loan against property, be sure to compare offers from multiple lenders to get the best rate and terms. And remember, if you default on your loan, the lender could foreclose on your home.

What is a home loan?

A home loan is a type of loan that is used to finance the purchase of a property. Home loans are typically repaid over a period of years, and can be either fixed-rate or variable-rate loans.

Pros and cons of each

When it comes to taking out a loan, there are a few different options available to borrowers. Two of the most popular choices are home loans and loan against property (LAP) products. Each option has its own set of pros and cons, so it’s important to weigh up all the factors before making a decision.

Home loans are typically used for the purpose of purchasing or renovating a property. They usually come with lower interest rates and longer repayment periods than other types of loans. However, they also tend to have stricter eligibility criteria and require collateral in the form of your property.

Loan against property products, on the other hand, can be used for any purpose – whether it’s consolidating debt, funding a business venture or paying for home improvements. They often come with higher interest rates but offer shorter repayment periods. One of the main advantages of LAP products is that they can be secured against multiple types of collateral, including investment property, shares and even jewellery.

Which one should you choose?

There are a few key differences between loan against property (LAP) and home loans that you should be aware of before making a decision. For one, interest rates on LAP are usually higher than home loan rates. Additionally, LAP can be used for both personal and business purposes, while home loans are typically only for personal use.

Another key difference is that LAPs are secured by your property, which means that if you default on the loan, your lender can take possession of your property. Home loans, on the other hand, are unsecured and thus carry a higher risk for the borrower.

So, which one should you choose? It really depends on your individual needs and circumstances. If you need a large loan amount and have equity in your property, then a LAP may be a good option. However, if you don’t have much equity or if you’re not comfortable with the idea of your property being used as collateral, then a home loan may be better suited for you.

How to apply for each type of loan

Loan against property:

To apply for a loan against property, you will need to contact a lender and fill out an application. The lender will then determine if you are eligible for the loan and what the terms will be. If you are approved, you will need to provide collateral for the loan in the form of your property. The loan will then be disbursed to you and you will make monthly payments until it is paid off.

Home loan:

To apply for a home loan, you will need to contact a lender and fill out an application. The lender will then determine if you are eligible for the loan and what the terms will be. If you are approved, you will need to provide collateral for the loan in the form of your home. The loan will then be disbursed to you and you will make monthly payments until it is paid off.

Conclusion

We hope that this article has given you a better understanding of the differences between loan against property and home loans. While both can be great options depending on your particular needs, it is essential to understand the pros and cons associated with each one so that you can make an informed decision about which type of loan works best for you. Do not hesitate to reach out to us if you have any further questions or need help deciding which option is right for your financial situation.

Home Loan Rate Chart - 2023

Home Loan Banks	Home Loan Rates	Processing Fees*
LIC Housing Finance	8.70% onwards	As applicable

Punjab National Bank	8.55% onwards	0.40% of loan amount (Min. Rs. 2,000; Max. Rs. 16,000)
HDFC Bank	8.35% onwards	Up to 0.6% of loan amount or Rs. 5,000, whichever is higher
United Bank of India	8.70% onwards	0.70% of loan amount (Min. Rs.1200; Max. Rs.11,900)
Canara Bank	8.75% onwards	0.55% of loan amount (Min. Rs. 1,400; Max. Rs. 11,000)
Bank of Baroda	8.45% onwards	0.25% – 0.50% of loan amount (Min. Rs. 8,500; Max. 15,000)
ICICI Bank	8.40% onwards	0.60% – 1.00% of loan amount or Rs. 1,500 – Rs. 2000, whichever is higher
Bank of India	8.25% onwards	0.25% of loan amount (Min. 1000 and Max. Rs. 50,000)
Citibank	8.60% onwards	Up to Rs. 5,000
Federal Bank	8.75% onwards	0.50% of loan amount (Min. Rs. 3,000; Max. Rs. 7,500)
Reliance Home Finance	9.85% onwards	0.40% – 1.5% of loan amount
Indiabulls Housing Finance	8.70% onwards	Up to 1% of loan amount
Bajaj Finserv	8.40% onwards	0.70% – 1.20% of loan amount
Axis Bank	8.75% onwards	Up to 1% of loan amount (Min. Rs. 10,000)
Karur Vysya Bank	8.45% onwards	Rs. 2,500 – Rs. 8,500

PNB Housing Finance	9.00% onwards	Up to 1% of loan amount
Tata Capital	9.45% onwards	0.50% of loan amount
Syndicate Bank	8.45% onwards	0.125% of loan amount (Min. Rs. 500 to Max. Rs. 5,000)
Standard Chartered Bank	9.40% onwards	Up to 1% of loan amount
DBS Bank	Up to 9.80%	Up to Rs. 10,000
Central Bank of India	8.35% onwards	Up to 0.50% of loan amount (Max. Rs. 120,00)
DHFL	9.35% onwards	Salaried/Self Employed Professional – Rs. 2,500 – Rs. 18,000 Self Employed Non Professional – Net PAT: 0.5%, Others: 1.5%
YES Bank	9.75% onwards	2% of loan amount or Rs. 15,000, whichever is higher
IDFC First Bank	Up to 12.40%	Up to Rs. 12,000
IIFL	10.50% onwards	Rs 6,000 to 1% of loan amount
India Shelter Finance Corp. Ltd.	13.00% onwards	2% – 3% of loan amount
Allahabad Bank	8.35% onwards	0.24% – 0.40% of loan amount (Max. Rs. 50,000)
IDBI Bank	8.35% onwards	Up to Rs. 10,000
Kotak Mahindra Bank	8.85% onwards	Up to 2% of loan amount

Loan Against Property Rate Chart - 2023

Kvs bank	10.70%	Rs 5,000-50,000	Up to 50% of the property’s value (Maximum Rs 10 crore)	7
SBI	9.95%-11.55%	1% of the loan amount (Maximum Rs 50,000)	10 lakh-7.0 crore	15
Syndicate Bank	11.60%	0.5% of loan amount (Minimum Rs 500)	Up to 50% of the property’s realisable value	10
Pnb Housing	10.85%-12.85%	1% of loan amount	10 lakh-5 crore	12
Kotak Mahindra Bank	9.90%-10.65%	Up to 2% of loan amount	10 lakh-5 crore	15
ICICI Bank	10.20%-11.95%	1% of loan amount	10 lakh-5 crore	15
Axis Bank	11.35%-11.85%	1% of loan amount (Minimum Rs 10,000)	5 lakh-5 crore	20
Fullerton india	11.90%-18.15%	1.5% of loan amount (Minimum Rs 3,000)	Up to 5 crore	15
HDFC Ltd.	10.65%-12.40%	Up to 1.5% of Loan amount	Upto 60% of the property’s market value (existing customers); Up to 50% for new ones	15
IIFL	12.50%-22.00%	Up to 3% of loan amount	Up to 10 crore (Up to 65% of property’s market value)	15
Adhar Housing	11.30%-18.30%	1% of loan amount	Rs 5 lakh onwards	15
Vastu Housing	11.00% onwards	Up to 4% of loan amount	Up to 75% of property’s current market value	20