There is very slight difference between home loan and loan against property which is confusing for many loan seekers. There are doubts regarding the documents required for home loan and documents required for loan against property, repayment options for both type of loans and many such details. Both the loans serve different purposes. Here are a few differences which can help you have a clear idea about the two types of loans given by financial institutions:
- When you apply for home loan, you are offered a loan by a financial institution against a property you wish to buy whereas loan against property is money by a financial institution for an existing property.
- Home loan can be issued for the purpose of buying a property whereas loan against property can be used for personal emergencies or any other purpose.
- While documents for home loan can be more than documents required for loan against property as many banks ask for floor plans, layouts and construction approvals for the building which need to be provided by the builder.
- The minimum age and interest rates for loan against property and home loans can differ depending upon financial institutions so ask for detailed information before starting the process of loan application.
- The payment period of loan against property can be up to 15 years whereas this period can stretch up to 30 years for home loan. There is no prepayment penalty on loan against property.
Now you can easily choose if you need to apply for home loan or take a loan against property.