When it comes to borrowing against real estate, two common options are Loan Against Property (LAP) and Home Loans. While both use property as collateral, they serve different purposes and have distinct features.
Vizzve Finance helps you understand the differences so you can make an informed borrowing decision.
What is a Loan Against Property (LAP)?
LAP is a secured loan where you pledge your commercial or residential property to avail funds for any purpose like business, education, or medical expenses. The loan amount depends on the property’s market value.
What is a Home Loan?
A home loan is a loan specifically for purchasing, constructing, or renovating a residential property. The loan tenure is usually longer, with favorable interest rates.
Key Differences Between LAP and Home Loan
| Feature | Loan Against Property (LAP) | Home Loan |
|---|---|---|
| Purpose | Any personal or business expenses | Buying, constructing, or renovating a home |
| Loan Amount | Up to 60-70% of property’s market value | Up to 80-90% of property’s purchase price |
| Interest Rates | Generally higher than home loans | Usually lower due to government subsidies |
| Loan Tenure | Typically 5 to 15 years | Longer tenure, up to 30 years |
| Processing Time | Faster compared to home loans | May take longer due to property verification |
| Tax Benefits | Interest not eligible for tax deductions | Interest eligible under Section 24(b) |
Which Loan is Right for You?
Choose LAP if you need funds for purposes other than buying a home and want a larger loan amount quickly.
Choose a Home Loan if you plan to buy or build your residential property and want tax benefits.
How Vizzve Finance Can Help
At Vizzve Finance, we offer customized loan solutions with transparent terms and expert advice to help you pick the right loan for your needs.
FAQs
Q1. Can I use LAP to buy a house?
No, LAP is meant for purposes other than purchasing a new home.
Q2. Is the interest rate fixed for LAP and home loans?
Rates vary by lender and loan type; home loans typically have lower rates.
Q3. Can I get tax benefits on LAP interest?
No, tax benefits are generally available only on home loan interest.
Q4. How long does loan approval take for LAP and home loans?
LAP usually has quicker processing; home loans may take longer due to more documentation.
Published on : 10th August
Published by : SMITA
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