Home Loan vs. Loan Against Property: What's the Difference?

While both home loans and loans against property (LAP) involve real estate, they are fundamentally different.

Home Loan

A home loan is specifically for purchasing or constructing a residential property. The property being bought is mortgaged with the lender.

Loan Against Property (LAP)

A LAP is a loan you can take by mortgaging a property you already own. The funds can be used for any purpose, like business expansion, education, or a wedding.

Key Differences

• Purpose: Home loan for buying a house; LAP for any personal or business need.
• Interest Rates: Home loans often have slightly lower interest rates than LAPs.
• Tax Benefits: Home loans offer significant tax benefits on both principal and interest repayment, which are not available for LAPs (unless used for specific business purposes).