Home loan vs loan against property - key difference
Posted On: 07-April-2022
When you apply for home loans there are a lot of financial terms and conditions that often confuses you. The borrowers mostly get confused between home loans and loan against property. Sometimes loan against property is also termed as mortgage loan. So to make it clear for you we’ve brought this article which shows the difference between loan against property and home loan.
Home loans are loans borrowed by the homebuyers to purchase a property, land, plot or any under construction property. In contrast loan against property is a kind of secured loan in which you mortgage your property in order to meet financial needs. The need can be anything, personal or professional. Loan against property is used for multiple purposes such as funding your educational expenses, to expanding your business, to fund a wedding or anything.
Let us now look at the key differences between home loans and loan against property.
- The interest rate for home loan is or more than 8.70% whereas the interest rate for loan against property is 9.50% onwards. Thus loan against property is offered at a higher interest rate in comparison to home loans. Home loans are given at a lower interest rate.
- The tenure for a home loan may extend up to 30 years whereas the tenure for a loan against property is only up to 15 years.
- The purpose of taking home loan is strictly to buy or purchase a land, or a plot, or a property under construction. But loan against properties are taken for either business purposes or for personal use.
- Loan against property is granted at maximum up to 60% of the property value. Home loan is offered maximum up to 90% of the property value. Value of property is also sanctioned by the banks in a loan against property.
- There are no tax benefits in case of loan against property whereas home loans come with tax benefits under section 24 for interest and 80C for principal amount.
- Home loan takes approximately 15 days for its sanctioning with simple documentation process. In case of loan against property this time duration is much longer because financial institutions go through the property details as well as the personal information of the borrower or applicant.
By considering all these key differences, the borrowers can decide which is the loan type they would go for. By visiting the website of ESWARI CAPITAL you can fetch more information about these loan options and also choose from the various loan options offered.