Individuals may require financial assistance for various purposes. Financial institutions offer different terms of service and benefits on various financial products. Depending on the requirements, a borrower can avail the most suitable type of loan to meet their needs.
Home loans and loans against property are among the most availed financial products. Both these loans are secured credits but they are different and serve different purposes.
A Brief Idea About Home Loans
A home loan is a financial product that a borrower can use to purchase a residential property. It can also be used to fund the expenses to renovate or expand an existing property.
A Brief Idea About A Loan Against Property
Loans against property are financial products that are availed by mortgaging a residential or commercial property. Property loan can be used to fund various expenses as such loans come with zero end-user restrictions.
Advantages Of Loans Against Property Over Home Loans
- It Offers Diverse Usage
Loans against property do not come with restrictions of usages like home loans. A borrower can avail loans against property to fund expenses related to medical emergencies, marriage, higher education, etc.
- In-hand Disbursal Of Loan Amount
The disbursement of the amount in case of loans against property is an in-hand process. IN case of home loans, the loan amount availed is utilized completely to purchase the property. Borrowers can avail LAPs to fund expenses in emergency situations which is not possible in case of home loans.
- Simple Documentation Process
The documentation process in case of a loan against property is much simpler compared to home loans. Home loans require an extensive documentation process along with different stages of verification of the concerned property. The list of documents needed to avail a loan against property is far lesser compared to a home loan.
Differences Between Home Loans And Loans Against Property
Home loans and loans against property are two types of secured loans. These financial products come with their own benefits and scopes. The major differences between the two include –
- LTV Ratio
Loan to value ratio varies drastically applies specifically to loans against property and only home renovation loans. In case of home loans utilized for property purchase, the down payment made by the borrower determines the LTV for that specific property.
Financial institutions generally offer up to 60-70% of the property value as the loan against property.
A borrower can check the loan amount that can be availed by using an online loan against property calculator.
- Loan Tenure
Home loans and loans against property both are high-value loans with significant tenure. The tenure in case of a home loan usually lasts for 20 years. Loans against property may also come with just as high tenure.
A borrower can calculate the EMI for loans against the property by using an online loan against property calculator.
The above-mentioned points should be able to establish the reasons why a loan against property is a more flexible financial product than a home loan. Borrowers need to determine the ideal tenure of loans against property to avail the maximum benefits from it.
- Interest Rates
Interest rates are significantly lesser in case of home loans as the Government of India has taken an initiative to provide houses for its citizens at affordable interest rates.
A borrower can check the payable EMI’s by using an online LAP EMI calculator. However, leading financial institutions such as Bajaj Finserv to provide loans against property with just as attractive interest rates other than numerous additional borrower-friendly features such as Flexi Loan facility. With this facility, you can withdraw the funds you need from the available loan pool and pay interest only those funds. You can also optionally pay interest-only as EMIs.
They also provide pre-approved offers to avail loans quickly and easily. Pre-approved offers also cover various financial products like home loans, business loans, personal loans, etc.