Home Loan vs Loan Against the Property

There are many financial terms available that sometimes leave the borrower confused at some point. Particularly at the time of home loans, there are two terms used namely Home Loan and Loan Against Property. The difference here is that the Home Loan is taken to buy a new home, flat, plot or an under construction property. Loan Against Property also known as Mortgage Loan is used for various purposes like business, marriage, medical emergencies, or higher studies for children.

The Home Loans can be availed with interest rates starting from approx. 8.70% and for the mortgage loans, it can be taken for interest rates of about 9.90%. Also, the LTV or Loan To Value is more on the home loan side as compared to the mortgage loans. The maximum LTV for a home loan is 90% of the total property value whereas the mortgage is given a low value of 60% of the property value.

The tenure is also leaned more towards the home loan side for as long as 30 years. Taking a loan at a very early age for buying a home gives a long time for repayment with lower EMIs. On the flip side, a mortgage is given a short tenure of about 15 years maximum.

The conclusion here is that a customer can clearly choose between taking a home loan or loan against property as per his/her requirements.