Home Loan vs Loan Against Property Choose The Best Option
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Though these loan offerings are secured, there are a few differences between them. You must identify your needs and choose the one that fits your usage. According to interest rate, loan tenure and EMI, Home Loan will be better if someone interested to take a loan for his/her house. So eventually we can say that the EMI of a home loan is much lower than a loan against property.
Leading lending institutions allow you to select the securities from a list of 800+ approved securities. The question of which among the two is better is not really relevant, as they serve different purposes. Before finalizing a vehicle, you should do a thorough research of various car models, their features and mileage, and finally, the mode of finance.
Who can take a Loan Against Property :
Alternatively, a line of credit may be set up in the form of an overdraft facility with a set limit, based on the value of the property and repayment capacity of the borrower. Easy accessibility of loans and a wide range of home loan products have made life easier for the borrower. But sometimes the variety of options can make it a bit tough to decide which loan to go for when you are planning to apply for a loan. A case in point is when deciding between a loan against property and a home loan. Most people confuse these two different types of loans and use their names interchangeably.
Well, home loans are loans taken for buying or purchasing a house, a flat, plot of land, or an under-construction property. Loans against property are one-step further, where you can borrow or take a loan for myriad personal purposes ranging from funds for medical expenses and marriages, to expenses for vacations and business expansion. This goes to also mean that your home, house, or property will be used as mortgage to secure your borrowings.
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It is a secured loan because the lender takes the property as security for a home loan. In case of default in repayment of the home loan, the lender can take possession of the property and sell it off to cover losses. A loan against property, as a mortgage loan, is available for property owners. They can mortgage their existing residential or commercial property to get funds from the lending institution.
A home loan is what you need if you are thinking of buying a property be it commercial or personal. But if you are planning to take a loan for fund requirements that go beyond purchasing a house, a loan against property would be a good option. As the name suggests, a loan taken against a property or mortgage is defined as a loan against property.
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Lenders take the title of your home as collateral while you make monthly payments during the time of the loan. Listed below are some key factors which highlight the difference between a home loan and a loan against property. That said, you could infer exactly how a loan provider you are going to describe a residential property from their concept of an additional family. A residential property could well be rented, it could be next to most of your home, and situated in a domestic, non-travel city.
Is a straightforward home loan preferable to borrowing money against a loan against property? If you’re interested in purchasing a home and need the money to do so, you should apply for a home loan. In contrast, if you already own a home or business and you require money to meet particular needs, you would apply for a loan against the property.
Home Loan vs Loan Against Property
Mortgage loans typically allow you to take a top-up loan over your existing loan. This is possible as you may be eligible for a much larger loan than you have initially opted for. For example, if you are eligible for a loan of up to 70% of the property's market value but have initially taken a loan for 50% of the value – you would be able to take a top-up loan for up to the remaining amount that you are eligible for. Home loans typically do not offer a top-up facility, though a few lenders may offer it based on their own assessment of your repayment capabilities. Given the varying circumstances, many different loan products are available today in the market. One such pair that people get confused about is home loan and mortgage loan.
I am looking for home loan”, says the enquirer and disconnects the call. The executive gets no time to explain the confusion and the conversation ends there forever. This made one thing clear for the executive, that he learned to reconfirm with every enquirer, “Is it loan against property i.e. mortgage loan or home loan that you are looking for”.
A home loan and loan against property are two different products, understand the difference and then apply as per your requirement. In conclusion, you should opt for a home loan if you wish to finance the purchase or construction of a residential property. Therefore, if you have a different requirement, a mortgage loan is a good option. Both these secured loans also offer other services like balance transfer, top-up loans, etc based on the total loan amount that you are eligible for.
A home loan borrower has the option to transfer it from base rate to MCLR and also from a higher rate lender to another lender offering much lower rate. Some banks such as SBI presently have zero processing fee on balance transfer but generally, there is a fee involved. Both Home Loans and Loans Against Property are sizeable and secured type of loans with an array of benefits. Bajaj Housing Financeoffers Home Loan and Loan Against Property on competitive terms and a flexible repayment tenor. This is where a home loan has a big advantage over a loan against property, i.e., tax savings. Under the Income Tax Act 1961, you can avail tax deduction of up to Rs 1.5 lakh on the payment of the principal amount and a deduction of up to Rs 2 lakh on the interest paid under Section 24, only if the owner resides in the house property.
However, our financial situation often hinders the path to achieving them all. You will now receive updates on the new insightful blog, company announcement, product offering, & more. Home Loans are exclusive, which means that a Home Loan can only be used for the purchase or renovation of a house.
One of the main differences between a home loan vs loan against property is the interest rates and repayment periods. Home loans have lower interest rates than personal loans but have longer repayment periods which can be up to 30 years for some mortgages. Personal loans have higher interest rates and shorter repayment periods which are typically around 5 years. Even though a home loan and loan against property may sound similar to new borrowers, they differ in the purpose they serve.
On the contrary, you may seek a loan against your property for varied purposes. This means that borrowings may be used for personal reasons, for business inclusive of commercial and industrial, or any other use you have in mind. This also means that the property you mortgage could be your personal property, or your industrial or commercial property. The enquirer wanted to know on the loan he can get on his property, his eligibility, time process, fees and importantly the rate of interest, in precise. Our executive before explaining re-confirmed “Is it loan against property that you want to know?
In contrast, a loan against property is taken by keeping an existing property as security, with the loan being used to fulfill various purposes. Here, we will discuss the differences between these two types of loans. A home loan or housing loan is a facility through which you can get funds to buy a house by paying a small portion as the down payment and continuing repaying the loan up to the selected tenure. The loan is availed on the basis of the current value of the property by considering many factors such as the age and income of the applicant, credit or CIBIL score and history, property location, professional stability and employer category. You can claim a deduction of up to ₹1.5 lakh under Section 80C on home loan principal repayment.
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