Home Loan vs Loan Against Property: All You Need to Know in 2025

1. Home Loan vs Loan Against Property: All You Need to Know in 2025 In 2025, individuals looking to meet financial goals have more options than ever. Two popular choices are Home Loans and Loans Against Property (LAP). Both these loans allow individuals to borrow money by leveraging real estate, but they serve different purposes, come with different terms, and suit different needs. Here’s a detailed comparison to help you make an informed decision. 1. Purpose • Home Loan: A home loan is specifically for purchasing a new property, constructing a house, or renovating an existing one. The loan amount is generally based on the value of the property you intend to buy or build, with the property itself serving as collateral. • Loan Against Property (LAP): Aloan against propertyallows individuals to borrow money by pledging their existing property—be it residential, commercial, or industrial. Unlike a home loan, LAP is not restricted to the purchase of property. It can be used for a variety of purposes such as business expansion, education, medical emergencies, or debt consolidation. 2. Loan Amount and Property Type • Home Loan: Typically,home loansoffer a higher loan amount, as they are based on the value of the property you're purchasing or constructing. The loan-to-value (LTV) ratio can be up to 90%, depending on the lender and property type. Most lenders prefer residential properties for home loans. • Loan Against Property: The loan amount for LAP is generally determined by the market value of the property being pledged. The LTV ratio for LAP is typically lower, around 50% to 70%. LAP is more flexible in terms of property types, as you can pledge residential, commercial, or industrial properties. 3. Interest Rates (A) Housing Loans- Rate of Interest on Percentage Per Annum basis

2. (B) Loan Against Property - Rate of Interest on Percentage Per Annum basis Source:https://backend.shubham.co/upload%2F2024-08-12T05%3A01%3A17.374Z- 368481795-Rate%20of%20Interest%20Approach.pdf 4. Tenure and Repayment • Home Loan: Home loans typically come with longer repayment tenures, ranging from 10 to 30 years, allowing for smaller monthly installments and better affordability. • Loan Against Property: LAP usually offers a repayment tenure of 5 to 15 years. The shorter repayment period results in higher EMIs compared to a home loan, but it helps in quicker repayment. 5. Eligibility and Documentation • Home Loan: To qualify for a home loan, the applicant must have a stable income, a good credit score (usually above 750), and a low debt-to-income ratio. The documentation process generally includes proof of identity, address, income, and property documents. • Loan Against Property: Eligibility for LAP also depends on the applicant’s income and credit score, but the primary factor is the value of the property being pledged. The documentation required is similar to that of a home loan, but it may also include proof of ownership and valuation of the property. 6. Risk and Consequences

3. • Home Loan: The risk with a home loan is relatively lower, as the property is newly acquired and directly linked to the loan. However, failure to repay can result in foreclosure and loss of the property. • Loan Against Property: With LAP, there’s a greater risk as the borrower is already an owner of the property. Non-repayment can lead to the lender seizing the property, which could be a significant personal loss. Conclusion The choice between a Home Loan and a Loan Against Property ultimately depends on your specific needs. If your goal is to purchase or build a home, a home loan is the most suitable option. However, if you need a loan for personal or business purposes and own an existing property, a Loan Against Property may offer greater flexibility. In both cases, it's essential to compare interest rates, loan terms, and eligibility criteria from different lenders to make an informed decision that aligns with your financial situation in 2025.