What is the Difference Between Home Loan vs Loan Against Property?

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Priti 2023-03-17T10:29:06+05:30 1 Answer 12 views
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  1. shiv
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    2023-03-17T10:34:22+05:30
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    The only similarity between a home loan and a loan against property is that both are secured loans. However, to understand what is the difference between home loan vs loan against property, one has to first know the meaning of these two loans separately. So let me share here the definitions first and then their differences.

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    What is meant by a home loan?

    A home loan is a loan that one takes to buy a ready-to-move-in house, a property under construction or land where the applicant intends to build a house. This is a secured loan and the borrower needs to pay a fixed EMI monthly to pay off the debt. 

     

    What is meant by a loan against property?

    A loan against property is a type of loan where the borrower pledges his existing property for a sum of money. He/she must hand over the property to the lender until the money gets paid fully. The amount can be paid in EMIs as well.

     

    What are the differences between home loans and loans against the property?

    The differences between home loans and loans against property are-

    Home Loan Loan Against Property 
    Home loans can be used for constructing a house or purchasing a ready-made house Loan against property can be used for both business and personal needs and has no end-usage restriction 
    One can get up to 90% of the property’s market value as a home loan One can get about 60-70% of the property’s market value as a loan against property
    The average interest rate in home loan is 8.60% for salaried and professional borrowers  The average interest rate in loan against property is 9.85% for salaried and professional borrowers
    Home loans are provided for 20-30 years Loan against property is provided for a maximum period of 15 years

    I hope the concept of home loan vs loan against property is totally clear to you now.

     

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