Taking home loans and loans against property is commonplace. However, when it comes to understanding the difference between these two terminologies, applicants are often left confused; we end up using these two terms interchangeably in casual conversation.
A loan against property is a secured loan that can be taken only after keeping a commercial or residential property collateral with the lending institution. Simply put, your property works as a guarantee and its value decides the loan amount. This type of loan is commonly termed as a mortgage loan or LAP.
On the other hand, a home loanor housing finance is undertaken to purchase a house, a plot of land or personal property that is under construction.
Let us look at a concise comparison of the two:
|Category||Loan Against Property (LAP)||Home Loan|
|End-Purpose Restrictions||Money use is open-ended. Multipurpose loan after mortgaging preowned property for (business as well as personal use): e.g. medical treatment, child’s college tuition, business expansion etc.||End-use restricted to the purchase of plot, house or property under construction.|
|LTV (Loan to Value Rate)||Up to 60% of the property value.||Up to 90% of the property value.|
|Processing Time||Can be anywhere between 5 working days to 4 weeks and more in special cases.||Generally, 3 to 5 weeks.|
|Processing Fee||Up to 1% of loan amount + applicable taxes||Up to 1% of loan amount + applicable taxes|
|Tax Benefit||No tax benefit||Tax exempt (under Section 24 for interest and 80C for principal amount)|
|Maximum Tenure (years)||Up to 15||Up to 30|
|Documentation Required||Photo identity proof, address proof, income proof, salary slips.||Age proof, photo identity proof, address proof, salary slips, income proof, existing loan details.|
The table above gives out a general range of figures and acts as a basic reference guide only. Your final home loan eligibility and LAP figures may differ. It is highly advisable to use a specific home loan EMI calculator or a general EMI calculator to zero-in on your interest percentages from a trustworthy source online.
Easy Home Loans at Tata Capital
Tata Capital offers easy housing finance with home loans designed to meet your needs with speedy disbursals and attractive home loan interest rates. We provide our customers with a free and reliable EMI calculator for home loan using which, you can get an estimation of your monthly EMIs.
Tata Capital’s home loans are designed to meet an array of needs. Whether you’re looking to renovate your home or purchasing a house for the first time, our housing loans take care of it all. Visit Tata Capital today to check your home loan eligibility with our home loan calculator. Simply enter your net monthly income, monthly obligations, rate of interest, and tenure – the home loan EMI calculator will display the maximum loan amount eligible and the EMI per month.