Tuesday, April 15, 2014

Loan Against Property vs Personal Loans

At some point in life, most of us might face a situation of financial emergency. It could be due to multiple reasons. During such times, the first thought is how do we raise the additional money? More often than not people rely on loans.

While availing loans for personal purpose, a lot of people often get confused whether to go for personal loan or LAP. There are several financial institutions in India that offer both personal loans as well as loan against property. If you are looking to avail funds, understanding the difference between the  features of personal loan and LAP will help you  make an informed decision. 

Individuals can avail LAP by mortgaging their property as a security cover. For personal loans, you need not have to pledge any property or there is no need for you to get a guarantor to sign the application. For LAP you can mortgage your commercial or residential property. It can even be a piece of land. 

After home loans, loan against property is the cheapest retail loan. The interest rate for LAP usually, varies in the rage of 12% to 15%. On the other hand, the interest rate for personal loan is much higher. It ranges from 16% to 21%. 

Since the rate of interest for LAP is lower, the EMI (Equated Monthly Installment) is also much lower as compared to the EMI for personal loan.

The maximum amount of loan you can get by pledging your property would depend on the market value of the property. For personal loan, the eligibility is determined by your monthly/annual income. 

A significant benefit of LAP is that it comes with longer repayment duration; it generally varies from 5 to 15 years. For personal loan, the maximum repayment duration is 5 years. 

Considering the above features it is quite evident that LAP has several benefits over personal loan. With Indiabulls Housing Finance ltd, you can avail loan against property and get up to 65% amount of your property value.

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