Loans & Property
Contents
Home Loan vs Loan Against Property
No Sign-Up. No Paywall.
FREE TO USENO LOGIN REQUIREDUPDATED FY 2025–26
Fresh purchase loan vs borrowing against existing property — rate, LTV, eligibility, and tax treatment compared.
Visual Comparison
Key Differences
| Feature | Home Loan | Loan Against Property (LAP) |
|---|---|---|
| Purpose | Purchase of new property | Any purpose (business, education, medical) |
| Interest rate | 8.5–9.5% p.a. | 10–12% p.a. |
| LTV ratio | 75–80% of property value | 50–70% of property value |
| Tax benefit | Section 24 (interest up to ₹2L) + 80C (principal) | No tax benefit |
| Tenure | Up to 30 years | Up to 15–20 years |
When to Choose Which
Choose Home Loan
- Purchasing a new home
- Want lower interest rate
- Want tax benefit on interest and principal
- Long tenure (20–30 years) needed
Choose Loan Against Property (LAP)
- Already own a property
- Need funds for business expansion or any purpose
- Home loan not applicable (no new purchase)
- Existing property can unlock liquidity
Frequently Asked Questions
A secured loan where you mortgage existing property to borrow 50–70% of its market value. You retain ownership; the bank holds the property as collateral.
Yes — LAP rates are typically 1–2% higher than home loan rates because the loan can be used for any purpose and the risk profile differs.
LAP interest is tax-deductible only if the loan proceeds are used for business purposes. There is no Section 24 benefit for personal use LAP.
Loan-to-Value ratio: typically 50–70% of property market value. E.g., ₹1 crore property → LAP of ₹50–70 lakh.
Home loan is cheaper (lower rate + tax benefit). But LAP is the only option if you already own property and need funds without selling it.