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Is Home Loan and Loan Against Property the Same?
Last Updated : March 12, 2021, 5:59 p.m.
Having a home is a dream for many. Owning a property requires arranging a huge amount of funds. One tends to arrange the maximum funds possible from their own sources. Since the requirement is high, to meet the shortage of funds, one generally plans for a loan. First-time borrowers willing to apply for a loan confuse between loan against property and home loan. Although they both sound the same however the concepts of both the loans are different.
| Serial Number | Parameter | Home Loan | Loan Against Property |
|---|---|---|---|
| 1 | Purpose of Loan | Home Loan is availed for acquisition of new asset or modification of existing home. | Loan Against property as the name suggests is given against a preowned property |
| 2 | Interest Rate | Home loan rates are as low as 6.65% | LAP rates begin at 7.50% |
| 3 | Processing Fee | 0.25% to 1% of the loan amount plus GST | The processing fee ranges between 1% to 2.5% of loan amount plus GST |
| 4 | Tenure | The Maximum tenure can be as high as 30 years | The loan can be taken for a maximum tenure of 15 years |
| 5 | Eligibility Criteria | Home loan is given to salaried and self employed both. | LAP is preferred to Self employed individuals |
| 6 | Approval Criteria | The Income and, property value and repayment history | Property value is given preference while approving LAP |
| 7 | Tax Benefit | Under section 80 (C) & 24 (D) tax benefit can be availed | There is no tax benefit on Loan against property |
| 8 | Collateral | Only residential house, flat or land is kept as collateral | Residential , commercial and industrial properties can be used as Collateral. |