Loan Against Property · 5 min read
Home Loan vs Loan Against Property: Which One Do You Need?
Both loans are secured by property, so they are often confused. The key difference is purpose: a home loan buys or builds a home, while a loan against property (LAP) unlocks money from a property you already own.
Purpose
A home loan can be used only to buy, construct, extend or renovate a residential property. A LAP can be used for business expansion, education, a wedding, medical expenses or consolidating other debt.
Interest rate and tenure
Home loans are usually the cheapest retail loans — indicative rates on RateWise start from 8.35% — with tenures up to 30 years. LAP is priced slightly higher, from 9.25% on our indicative table, with tenures up to about 15 years.
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Home loans typically fund 75–90% of the property value depending on the loan size. LAP usually lends 50–70% of the market value of your existing property, with residential property getting a higher share than commercial.
Which should you choose?
If you are buying or building a home, a home loan is almost always the better choice. If you need funds for anything else and own property, LAP is usually far cheaper than an unsecured personal or business loan.
Common mistakes
- Taking LAP to buy a home when a home loan would be cheaper
- Forgetting that home loans have tax benefits LAP may not
Frequently asked questions
Which is cheaper, a home loan or LAP?
Home loans usually carry lower rates. LAP is for other needs, using a property you already own.
Interest rates, fees, eligibility and loan terms vary by lender and borrower profile. Information on this page is for educational purposes and should not be considered a guarantee of approval or a specific rate. RateWise is a loan advisory, not a lender. Privacy Policy