Table of Content
You also acknowledge and agree that, unless specifically provided otherwise, these Terms of Use only apply to this Website and facilities provided on this Website. Home equity lines of credit – This type of loan works similarly to a credit card and the person can pay it off whenever they have money available, but they have access to cash up to 90% on their real estate’s value. Unless used to buy another property there are no tax exemptions that can be availed on a loan against property. On the other hand, various tax exemptions can be availed on a home loan under Section 80C and Section24. Ultimately, Don’t get a good shortcut and pretend your investment home is the second home.
Further, you can also claim an exemption under Section 24 on the interest payment on your home loan. Is generally in the range of 9-12 per cent, depending on the type of lender and the profile of the borrower. The rate of interest on loan against property, is generally higher than home loans but lower than personal loans. The rates may vary from per cent, again depending on the type of lender and profile of the borrower.
Home Loan Details
As per the guidelines issued by RBI, the maximum loan amount a person can get through a home loan ranges from 75%-90% depending on the loan to value ratio. Why Investing in India is considered a safe option for the NRI Investors based in the UK, USA and East Africa. You can switch the collateralized securities with other securities available in the approved list. You can decide if you want to repay the interest and principal or only interest by setting off the principal against the collateral. We offer a diversified product suite to address the growing financing needs of individuals and enterprises. The Website reserves the right to discontinue or suspend, temporarily or permanently, the facilities.
For example, you might get confused between a home loan and a loan against property. The lender owns the property till the borrower pays the EMI after which the ownership is formally transferred to the borrower. If the borrower defaults on the EMI, the lender can auction it to recover the loss. A loan against property can be availed by a Salaried individual, Self-employed individual.
Loan Tenure :
You need to know that there is a huge difference between a home loan and a loan against property. Home loans are taken for the specific purpose of buying a house while loan against property can be used for varied purposes. Home loans can offer better interest rates, LTV, and tenure, while the lack of end-usage restrictions is a prime advantage of loans against property. The loan can be taken from the bank or any other financial institution that offers loans for home purchases. A mortgage is a type of loan that the borrower pays back through periodic payments, usually monthly instalments.
A home loan and loan against property are two different products, understand the difference and then apply as per your requirement. In conclusion, you should opt for a home loan if you wish to finance the purchase or construction of a residential property. Therefore, if you have a different requirement, a mortgage loan is a good option. Both these secured loans also offer other services like balance transfer, top-up loans, etc based on the total loan amount that you are eligible for.
How Loan Against Property is Different from Home Loan?
In Home Loan, the loan tenure is longer than the Loan Against Property. You can repay the loan over the period of 30 years while in loan against property you get a maximum period of 15 years. Everyone needs money in order to fulfill their desire or dreams but not everyone afford it.
The borrower submits property documents to the lender for the period of the loan repayment. A home loan is taken for the purpose of either buying a ready-to-move-in house or for the purpose of booking an under-construction property. Home loans are available for residential, as well as commercial properties. On the other hand, a loan against property is generally taken, for the purpose of raising additional funds for business. It can be a pure loan, under which, a lump sum is paid to the borrower, against the security of an immovable property.
Tax benefits of home loans and loan against property
In addition, the Website welcomes your feedback as a user of the facilities. The Website shall have a worldwide, royalty-free, non-exclusive, perpetual, and irrevocable right to use feedback for any purpose, including but not limited to incorporation of such feedback into the Website or other Website software or facilities. You are advised to consult an investment advisor in case you would like to undertake financial planning and / or investment advice for meeting your investment requirements. Both home loans and Loans against property can help in fulfilling the monetary requirements of a borrower. The house being purchased can be used as security for home loans while any property owned by the borrower can be pledged to avail a loan against property. When it comes to secured advances, borrowers often get confused between loan against property and home loan.
As you can see, home loans and loans against property are not completely the same. When it comes to home loans, many financial terms confuse applicants. Mostly, borrowers get confused between a 'home loan' and a 'loan against property, and their features and benefits become more confusing for them.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information. First, a personal loan is typically for a smaller amount of money than a mortgage.
However, the extent to which this benefit can be availed of, will depend on the use of the funds. In case the fund has been used to purchase another residential property, tax rebate under Section 24 is available to the borrower. Unlike home loans, no deduction is available on the principal amount though. Loans against property may also be obtained for personal purposes like education or marriage in the family. A loan against property can also be availed, to finance the purchase of another property, in case it is not possible to get a home loan against the property, due to any technical reasons like defect in the title of the property being purchased. The security pledged, for taking a loan against property, may be a residential or commercial property.
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