Many of us must have faced a direful situation for immediate requirement of funds at some point of time. Also you may have sought many options to meet the financial requirement of medical emergencies, children’s education, marriage expenses, home repairs and renovations, dream vacations, business expansions etc. But among the many options available there are these two credit options that are most popular for funding your financial needs, namely, the personal loan and the loan against property. Consider this article your guide to choose between the two popular credit products i.e. the personal loan and the loan against property.
Difference Between Personal Loan & Loan Against Property
|Sr. No.||Parameter||Personal Loan (PL)||Loan Against Property (LAP) / Mortgage Loan|
|1||Meaning||A personal loan is an unsecured debt that is the loan given without any collateral.||Loan against property is a secured loan that is given against the collateral of your property which can either be residential, commercial, industrial, factory or a plot. LAP is the second cheapest loan after home loans.|
|2||Nature||Unsecured Loan||Secured Loan|
|3||Interest Rate||Fixed as well as floating||Fixed as well as floating|
|High in comparison to loan mortgage loan||Cheaper in comparison to personal loan|
|Range from 11% p.a.- 26% p.a.||Range from 9% p.a. – 12% p.a.|
|4||Tenure||Maximum up-to 7 years||Maximum up-to 15 years|
|5||EMI||The shorter tenure of personal loans leads to higher per month instalment.||The longer tenure for mortgage loans enables comfortable loan distribution leading to smaller loan EMIs.|
|6||Processing Fees||Range from 2% – 4% on the loan amount||Maximum up-to 1% on the loan amount|
|PL Processing fees gets deducted from the loan amount||Full processing fee to be paid upfront for the loan disbursement.|
|7||Eligibility||On the basis of your income, CIBIL & repayment capacity.||On the basis of your income, CIBIL, repayment capacity & market value of the property.|
|8||Loan Amount||Since PL is unsecured in nature, the loan amount is usually limited which mainly depends on your eligibility.||Since LAP is a secured loan, you get a higher loan amount, generally upto 70% on the market value of the property subject to your eligibility.|
|9||Processing Time||Being unsecured in nature, processing is done only on your financials and hence can be processed within days.||LAP being secured loan takes longer processing time due to the legal & technical of the property. Know more on step-by-Step processing of lap loans.|
|10||Lock-in Period||PL generally comes with a lock-in period of 6 months or more.||No lock-in period in mortgage loan unless it is a fixed interest rate mortgage.|
|11||Part Payment||PL part payments are restricted which vary from lender to lenders.||No limit on the number of payments in a year.|
|Part Payment Charges||Range from 2%-5% on the outstanding loan balance.||Range from 2%-4 % on the outstanding loan amount.|
|12||Online Application||PL can be applied, sanctioned and disbursed online||LAP can be applied & sanctioned online. Disbursement is an offline process. Click to know who to apply online for LAP loan.|
|13||Documents Required||KYC & Income Documents||KYC, Income Documents & Property Papers For complete list of documents refer link – For Salaried, self employed – proprietorship firm, partnership firm, Private Ltd. firm. NRI List Of Documents for LAP- Click|
|14||Availability||Available in the form of term loan and overdraft facility||Available in the form of term loan and overdraft facility Know everything about mortgage overdraft.|
|15||Who Can Apply||Salaried, Self-employed & NRIs||Salaried, Self-employed & NRIs (8 business conditions for self employed applying for mortgage loan) Mortgage for senior citizens available in the form of reverse mortgage loans.|
|16||Balance Transfer Of Loan||PL can be transferred to another lender with low interest rates||LAP can be transferred to another lender with low interest rates subject to the foreclosure charges Document checklist for mortgage loan balance transfer- Click|
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|17||Top Up Loan||Top up loan can be availed subject to your income eligibility||Top up loan can be availed subject to your income as well as LTV factor i.e. the market value of the property|
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A Piece Of Advice
If you have a smaller loan requirement it is advisable to choose personal loan over the loan against property. It will not be a wise decision to give your high value property as collateral to earn a small value loan.
Loanfasttrack is a Mumbai based loan provider company since 2015 offering loan services in Mumbai on– housing loan in Mumbai, mortgage loan in Mumbai, personal loan in Mumbai, business Loan in Mumbai, unsecured business loans,home loan transfer, top-up loans and loan transfers. Loanfasttrack is a direct sales associate with leading banks namely, ICICI Bank, HDFC Ltd, Canara Bank, Citi Bank, Piramal Housing Finance, etc.
Loanfasttrack’s specialized services include providing:
- The best bank for home loan.
- Assured low interest rates for loan against property in Mumbai.
- Lowest home loan rates in Mumbai.
- Instant loan in Mumbai.
- Instant personal loan in Mumbai & business loan in Mumbai
- Low cost home loan balance transfer.
Website – www.loanfasttrack.com
Email – email@example.com
Tel – 9321020476