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Home Loan Vs Loan Against Property

By: Makemymoney

 Home Loan, there are various financial terms available in the market that leaves the applicant confused. In most of the case, the borrower gets confused between LAP & Home Loan. The kind of features, benefits, and resources offered by both are almost similar and quite confusing for Apply for loan in Delhi. Loan Against Property is also referred to as a mortgage loan. So, with blog let’s learn more about Home Loan Vs Loan against Property.

What is Home Loan? So, a home loan is the one taken majorly to buy an under construction property, plot, land or house. However, LAP is termed as secured loan as it helps the borrower to fulfill their personal financial need by mortgaging their property. LAP can be used or applied in case of various requirements like business expansion, marriage, higher education etc. Let’s see the major difference between both Home Loan & LAP with the help of differentiating table.

 

Category

Home Loan

Loan Against Property

Interest Rate

8.50% onwards

9.50% onwards

Margin

Up to 90% of Property Value

Up to 60% of the property value

Tenure

Up to 30 Years

Up to 15 years

Tax Exemption

Under section 24 for interest & 80C

No Tax Exemption

Purpose

To buy property under construction, land, plot or house Business Expansion, Marriage, higher education etc

Processing Fee

Up to 1% of loan amount + Processing Fee

Up to 1% of loan amount + Processing Fee

 

Comparison between Home Loan & Loan Against Property

Interest Rate:  

Home loans are available at lower interest rates as compared to LAP. The IR of LAP’s is higher because the chances of defaults are high in this case.

Usage: 

A mortgage loan or LAP can be used for various personal purposes like business expansion, higher studies, marriage etc. Where as the home loan can be availed for buying a plot, under construction etc. LAP can also be used for both industrial and commercial properties.  

Practices to Avoid: 

Don’t ever use amount received under LAP for any other purpose like speculative business activities, the stock market, gambling, buying and selling of shares etc. Don’t involve this borrowed money in any suspicious activities.  

Tenure: 

Tenure period of the Home loan is more than that of Loan Against Property.

Tax Exemption: 

The exemption in case of Loan Against property is nil. However, in Home loan tax exemption benefit is applicable under section 24 for interest and 80C for the principal.

Documentation Process:

In the case of Home Loan, documentation process take place for some 15 to 20 days. Whereas, in the case of LAP documentation takes much longer timing as per banks regulation.

We have given you basic and most important information about both types of loan. We wish you will be able to understand the basic difference between Home Loan Vs Loan against Property. And, will apply for Home Loan or Loan against Property Smartly.

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