A Loan Against Property (LAP) and a Home Loan are both types of secured loans, but they cater to different needs. Your choice really hinges on your financial goals and how you intend to use the money.
If you already own a property—be it residential, commercial, or industrial—and you’re looking for funds for personal or business purposes, a Loan Against Property might be the better option. Here’s why:
1. Flexible Use of Funds
With a home loan, the funds are tied to a specific purpose—like buying a new home, building one, or acquiring a ready-to-move-in property. On the other hand, a Loan Against Property offers you total freedom. You can use the money for:
- Expanding or starting a business
- Funding higher education or a wedding
- Paying off existing debts
- Covering medical or emergency expenses
- Renovating or upgrading your home.
In a nutshell, LAP gives you the financial flexibility that a home loan simply can’t match.
2. Higher Loan Amount Eligibility
When it comes to Higher Loan Amount Eligibility, lenders usually provide loans that cover about 70–75% of your property’s current market value. If your property is valued well in the market, this could mean you can secure a much larger loan compared to other credit options, like personal loans.
3. Attractive Interest Rates
Now, let’s talk about Attractive Interest Rates. Since a Loan Against Property (LAP) is a secured loan, the interest rates tend to be lower than those for unsecured loans. While home loan rates are a bit lower (since they’re specifically for buying assets), LAP rates are still quite competitive, especially if you’re planning to use the funds for business or personal expenses.
In Delhi, the average interest rates for LAP fall between 8.5% and 12% per annum, and this can vary based on your credit score, income, and the lender you choose.
4. Long Repayment Tenure
When you take out a Loan Against Property, you get the benefit of flexible repayment options, typically stretching up to 15 years. This flexibility helps keep your monthly EMIs manageable and makes it easier to plan your finances for the long haul. While home loans also come with extended repayment periods, a Loan Against Property gives you greater control over how you pay it back, which is especially useful if your income fluctuates due to business or personal obligations.
5. You Continue to Own and Use Your Property
Even though your property is used as collateral for the loan, you still retain ownership and can enjoy it as you wish. You can live in the property or even rent it out while you’re paying off the loan. Once you’ve settled the loan in full, the mortgage is lifted, and you’ll get your property documents back.
6. Quick Processing and Minimal Restrictions
When you compare it to home loans, which require a lot of property checks and appraisals before you can buy, a Loan Against Property tends to be processed much quicker—especially if your ownership documents are in order and up to date. Many non-banking financial companies (NBFCs) and private lenders in Delhi are known for their speedy LAP disbursals, sometimes getting the funds to you in just a few working days.
In Summary
Consider a Loan Against Property if you:
Already own property in Delhi, whether it’s residential or commercial
Need funds for various personal or business needs
Want the flexibility of higher loan amounts and longer repayment periods
Prefer to keep your property while tapping into its value for capital
On the other hand, opt for a Home Loan if your main goal is to buy or build a new house rather than for general financial purposes.
A Loan Against Property is a fantastic way to unlock the value of your existing real estate, providing you with financial freedom without the need to sell your asset.