Loan against Property or Home Loan
Jul 11, 2008
- A loan against property is
given against an existing property of the customer while a normal home
loan is a loan given for the purchase of a property.
- In a loan against property,
the end use is not monitored and you can utilize these funds to meet any
of your financial requirements. Whereas in a normal home loan, the end use
of the loan amount is monitored to ensure that the loan is actually used
to pay the seller of the property.
- The interest rates on loan
against property are higher than rates on home loans because the purpose,
for which the loan has been utilized, is not monitored by the bank.
- In a regular home loan, the
agreement value of the property is taken as a benchmark. In a loan against
property, the finance is against an existing property, and hence the
property needs to be valued by an approved valuer. Therefore, the loan is
based on current market value.
- The maximum tenure for which
you can get a home loan is longer compared to that of loan against
property. For home loans its 25 years whereas its only 15 years incase of loan
against property.
