Can Loan Against Property be Converted to Home Loan?

A Loan Against Property (LAP) and a home loan both use real estate as collateral, but they serve distinctly different purposes and follow separate lending frameworks. But can loan against property be converted to home loan? The answer is No!  

Can a Loan Against Property be Converted to Home Loan?

A LAP typically targets existing homeowners needing funds for any purpose business, education, medical expenses, etc. and carries higher interest rates (often 8.99% p.a. or more) with shorter tenures (up to 17 years).

Conversely, a home loan is designed specifically for purchasing or constructing a new residential property, features lower interest rates, longer tenures (up to 30 years), and is classified under Priority Sector Lending (for loans up to Rs35 lakh), making it more affordable.

Despite the similarities, you cannot directly convert a LAP into a home loan. This is because the products serve fundamentally different needs, carry different regulatory treatments, and have differing risk profiles.

LAP is unsecured in terms of usage, whereas home loans are secured by the property being purchased or constructed, often qualifying for tax benefits and priority sector status, advantages not extended to LAP borrowers.

However, borrowers seeking more favourable terms have alternatives, one option is to apply for a balance transfer or refinance of the existing LAP. Many lenders offer LAP balance transfers with competitive interest rates starting from around 8.99% p.a., along with longer tenures up to 20 years.

This can reduce EMI stress, improve tenure flexibility, and possibly unlock the option to avail top-up loans later.

If you\'ve taken an HDFC Jumbo Loan and want to know how to close jumbo loan in HDFC. Let me tell you that HDFC Jumbo Loan can be closed by visiting the HDFC Net Banking portal. This is an overdraft-based loan offered to HDFC credit cardholders.

How to Close HDFC Jumbo Loan?

Log in to

. Go to the Credit Card section. Click on \"Jumbo Loan\" to check the outstanding balance. Alternatively, check the HDFC Mobile App or your monthly credit card statement for loan details.

HDFC allows you to prepay the full outstanding amount before the loan tenure ends. There may be a foreclosure charge (typically 3-5%) on the outstanding principal. Contact HDFC customer support at 1860 267 6161 to request foreclosure details.

1. Net Banking: Transfer the remaining loan amount using your linked HDFC account.

2. Credit Card Payment: Pay through BillDesk, UPI, or NEFT to settle the loan.

3. Mobile App: Use the HDFC app to clear the pending amount.

Once the payment is made, call HDFC Customer Care and request a loan closure confirmation. You can also visit an HDFC branch and get a closure receipt. After loan closure, your credit card limit should be restored. If not, verify with HDFC support.

Prepayment is allowed but may attract foreclosure charges. Use net banking, UPI, or credit card payment to close the loan. Always request a closure confirmation to avoid future disputes.

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What is the Difference Between HDFC Jumbo Loan vs Personal Loan? 

Let me answer your query about can loan against property be converted to home loan. A Loan Against Property (LAP) cannot be directly converted into a home loan. It is because they are fundamentally different loan products serving distinct purposes. Read on to know more.

Can a Loan Against Property Be Converted to a Home Loan?

No. A LAP is a secured loan where your property is used as collateral, and the funds can be utilized for various personal or business needs. On the other hand, a home loan is specifically meant for purchasing or constructing a residential property.

However, there are some indirect ways to transition from a LAP to a Home Loan-like structure:

• One option is to repay your Loan Against Property and then apply for a new Home Loan. If you plan to use the property as your primary residence or to buy a new home, you can take a Home Loan after closing the LAP. This way, you can benefit from the lower interest rates typically offered on Home Loans.

• Another possible route is a balance transfer. While this option does not exactly convert your LAP to a Home Loan, you can transfer your LAP to another lender offering more favorable terms.

• Some lenders might provide competitive rates on LAPs, which may bring them closer to Home Loan rates. 

If the purpose of your LAP changes, such as purchasing a property, you could refinance by taking a new home loan and using that to settle the existing LAP. This option is more complex and would require approval from the lender. I hope you found this helpful.

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