Banks and NBFCs in India offer various type of loan to their customers. The loans are mainly divided into two: secured loan and unsecured loan. Home loan and loan against property both fall into the secured type of loan. The tenure in home loan and loan against property is longer and interest rate is low compared to other types of unsecured loans. In secured loan one has to mortgage his/her property in order to get funds against it. The original documents of the property are kept with the loan lender until the loan is paid in full in the given tenure. If the loan borrower fails to repay the loan, the lender seizes the property, sells it and recovers the loan amount. If an amount remains after the sale, it’s given to the loan borrower.
A home loan is mainly taken to purchase a new house. People also take a home loan to buy used property, to construct a house, to renovate a house or to re-construct a house. One can get a home loan for commercial as well as residential property. The loan borrower has to disclose the reason behind taking home loan and has to use the loan funds for that purpose only. The loan borrower is not allowed to use funds from home loan for other than home related purposes. One can get a home loan for residential as well as commercial property.
Loan against property:
Loan against property also known popularly known as LAP is one of the most popular secure mortgage loans in India. Like the name suggests, one can get a loan from a bank/NBFC by mortgaging their property. The funds taken from loan against property can be used for various personal and professional reasons. The loan borrower does not require disclosing the reason behind taking the loan. Banks and NBFCs in India offer loan against commercial as well as residential property.