Home Loan and Loan Against Property are among the most frequently used secured loan products, but many borrowers remain confused since both involve property as collateral. Home Loan is for a specific purpose—purchasing, building, or repairing a house—while Loan Against Property (LAP) is a loan taken against an already owned residential or commercial property, allowing you to raise money for any purpose. Both products offer large loan amounts and long repayment tenures but differ significantly in purpose, interest rates, eligibility, and advantages. This blog explains the difference between Home Loan and Loan Against Property.
| Criteria | Home Loan | Loan Against Property (LAP) |
|---|---|---|
| Purpose of Loan | Buy, construct, or renovate a house | Raise funds for business, education, medical, or personal needs |
| Interest Rates | 8%–11% (lower) | 9%–14% (higher) |
| Loan-to-Value (LTV) Ratio | Up to 75%–90% | 40%–70% |
| Loan Amount Eligibility | Based on income, credit score, property price | Based on income, credit score, market value of existing property |
| Tenure | Up to 30 years | Up to 20 years |
| Processing Time | Longer due to property checks | Faster (property already owned) |
| Risk Level | Risk of losing purchased home if defaulted | Risk of losing owned property if defaulted |
| Tax Benefits | Available (Section 24(b) & 80C) | Generally none (for business use only) |
| Property Type Accepted | Only residential | Residential, commercial, rented |
| Disbursement Process | Linked to property stage/verification | Lump-sum after valuation |
Home Loan is a secured loan to purchase, construct, or renovate a residential property. The property remains collateral until the loan is repaid.
Home loans are among the cheapest long-term finance options for property.
Loan Against Property (LAP) is a secured loan using existing property (residential, commercial, or rented) as collateral while you still own and use it.
LAP is flexible, high-value financing without selling your property.
LAP is costlier due to higher risk, lower LTV, and broader property types.
Ans: Borrow money by pledging existing property (residential, commercial, or rented) as security—retaining ownership/use. Lender can sell if you default.
Ans: Yes. Home Loans at 8%–11% interest, LAP at 9%–14% due to higher risk.
Ans: No. Only for buying, building, or renovating residential property.
Ans: Yes, if all documents clear.
Ans: Home Loan, with deductions for interest (24b) and principal (80C).
Ans: Home Loan: up to 30 years. LAP: up to 15 years.
Ans: Yes, usually 3–10 days if paperwork is ready.
Ans: Lender may repossess and auction the pledged property.
Ans: Yes, 700+ needed for both; 750+ best rates.
Ans: Yes, many banks offer both—extra documentation needed for LAP.
Ans: LAP if you need funds for non-property purposes; Home Loan for new home purchase/build.
Choose a Home Loan if you’re buying/building a home and want lower rates, longer terms, and tax benefits. Choose LAP if you already own property and need quick, high-value funding for any purpose. Understand your needs to make the best choice for 2025.
Sources and References:
I’m a contributor at Finanjo, where I write about personal finance, banking, and everyday money topics in a clear and practical way. I simplify complex finance jargon into easy explanations and real-life insights, covering everything from bank accounts and deposits to government schemes and smart money decisions so readers can understand finance without the confusion.
Home Loan and Loan Against Property are among the most frequently used secured loan products, but many borrowers remain confused since both involve property as collateral. Home Loan is for a specific purpose—purchasing, building, or repairing a house—while Loan Against Property (LAP) is a loan taken against an already owned residential or commercial property, allowing you to raise money for any purpose. Both products offer large loan amounts and long repayment tenures but differ significantly in purpose, interest rates, eligibility, and advantages. This blog explains the difference between Home Loan and Loan Against Property.
| Criteria | Home Loan | Loan Against Property (LAP) |
|---|---|---|
| Purpose of Loan | Buy, construct, or renovate a house | Raise funds for business, education, medical, or personal needs |
| Interest Rates | 8%–11% (lower) | 9%–14% (higher) |
| Loan-to-Value (LTV) Ratio | Up to 75%–90% | 40%–70% |
| Loan Amount Eligibility | Based on income, credit score, property price | Based on income, credit score, market value of existing property |
| Tenure | Up to 30 years | Up to 20 years |
| Processing Time | Longer due to property checks | Faster (property already owned) |
| Risk Level | Risk of losing purchased home if defaulted | Risk of losing owned property if defaulted |
| Tax Benefits | Available (Section 24(b) & 80C) | Generally none (for business use only) |
| Property Type Accepted | Only residential | Residential, commercial, rented |
| Disbursement Process | Linked to property stage/verification | Lump-sum after valuation |
Home Loan is a secured loan to purchase, construct, or renovate a residential property. The property remains collateral until the loan is repaid.
Home loans are among the cheapest long-term finance options for property.
Loan Against Property (LAP) is a secured loan using existing property (residential, commercial, or rented) as collateral while you still own and use it.
LAP is flexible, high-value financing without selling your property.
LAP is costlier due to higher risk, lower LTV, and broader property types.
Ans: Borrow money by pledging existing property (residential, commercial, or rented) as security—retaining ownership/use. Lender can sell if you default.
Ans: Yes. Home Loans at 8%–11% interest, LAP at 9%–14% due to higher risk.
Ans: No. Only for buying, building, or renovating residential property.
Ans: Yes, if all documents clear.
Ans: Home Loan, with deductions for interest (24b) and principal (80C).
Ans: Home Loan: up to 30 years. LAP: up to 15 years.
Ans: Yes, usually 3–10 days if paperwork is ready.
Ans: Lender may repossess and auction the pledged property.
Ans: Yes, 700+ needed for both; 750+ best rates.
Ans: Yes, many banks offer both—extra documentation needed for LAP.
Ans: LAP if you need funds for non-property purposes; Home Loan for new home purchase/build.
Choose a Home Loan if you’re buying/building a home and want lower rates, longer terms, and tax benefits. Choose LAP if you already own property and need quick, high-value funding for any purpose. Understand your needs to make the best choice for 2025.
Sources and References:
I’m a contributor at Finanjo, where I write about personal finance, banking, and everyday money topics in a clear and practical way. I simplify complex finance jargon into easy explanations and real-life insights, covering everything from bank accounts and deposits to government schemes and smart money decisions so readers can understand finance without the confusion.
