There are two types of loans that you can borrow for residential use. However, both of them have a lot of differences when it comes to their terms and conditions. Apart from this, another significant variation amongst them is regarding their interest rates.
Some people prefer a low loan against Property interest rate. While, the others like to go along, with a typical home loan. But to be honest, the final decision ultimately depends on their advantages.
To make sure that you can identify the more suitable financing service between the two. I have created a detailed comparison article which includes various factors like a loan against property interest rates, coverage, and benefits.
Loan against property in India
Such financing services are offered when a borrower is willing to mortgage his property to acquire funds. It is one of the most popular types of financing options available these days. Apart from the Loan Against Property Interest Rates, there are other reasons too which add to its high demand. One such factor is the lack of limitations.
What the loan covers?
Loan against property can cover various aspects of your requirements. To elaborate this point further, I have mentioned a few coverage options below.
- It covers your business, in case, it needs expansion
- The expenses of your dream wedding
- Education finance requirements for yourself or other family members
- Vacation plans can also be funded with the help of taking a lower percentage loan against property interest rate.
- The loan can also cover high-cost medical expenses that you might otherwise avoid.
Benefits of loan against property
Although, there may be a lot of advantages when it comes to this particular financing service. But I am going to mention only a few most important ones, which can help you make the decision immediately.
- The loan against property interest rates are much cheaper than other options
- A lower interest rate also affects the EMI amount making it less
- Your property value and income determines the loan against property eligibility
- It is a type of secured loan
- It gives you an extended repayment tenor of up to 15 years
Home loans in India
A home loan is also a mortgage financing service which is strictly used for buying new properties. Whatever might be the nature of your property commercial, industrial, or residential, it can be purchased using a home loan. However, the interest percentage of home loans are higher than that of a loan against property interest rate.
What the loan covers?
If it is your first time considering a home loan for your financing requirements. Then there are a few coverage points that you must keep in mind before applying.
- Firstly, the loan covers the purchase of new properties
- It includes construction cost related to creating new buildings
- It can be used for renovating an already existing property irrespective of its nature
- A home loan also covers the purchase of land or plot just like a low percentage loan against property interest rate does
Benefits of home loans
A typical home loan does not have as many benefits as borrowing credit against property in India. It also demands twice as much loan against property documents required in general. Still, the below-mentioned advantages are quite real.
- The government of India gives tax benefits on home loans to encourage people to buy their own property
- Those of you buying a second home are eligible to claim deductions on the entire housing loan amount
- There are no prepayment penalties attached with home loans
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