Mortgage loans are high-value loans that require an elaborate process and the buyer has to get familiarised with the various financial terminologies. This can confuse borrowers especially since people use the terms mortgage loans and loans against property interchangeably.
Here is a comparison of mortgage loan v/s loan against property that will inform the borrowers about their loan properties and features.
Mortgage loan v/s loan against property
Since there are several types of secured loans out there, this can confuse people about their features. Following are the key points about the two types of loans that make them similar and also point out their differences.
Mortgage loan
These are loans that are granted against assets or collaterals of substantial value, such as a person’s property. These are some of the key points about a mortgage loan:
- These loans are secured in nature.
- They offer better benefits, longer tenors, higher loan amounts, and lower interest rates compared to other loans.
- Borrowers can use the funds from these loans for higher education, medical expenses, purchasing a house, etc.
- There are 4 types of mortgage loans namely- home loan, lease rental discounting, loan against residential property, and loan against commercial property.
A mortgage loan is an umbrella term that also includes a loan against property which means they have more similarities than differences.
Loan against property
A loan against property (LAP) is a type of mortgage loan in which lending institutions give funds to an individual against a commercial or residential property.
Here are some of its features-
- Loans against properties are secure loans.
- Lenders provide these loans against commercial properties and residential properties.
- Individuals can use the funds from this loan for business purposes, medical emergencies, educational purposes, debt consolidation, etc.
- Lending institutions offer attractive features such as repayment tenor up to 18 years, no prepayment, and foreclosure charges on a loan against property.
The criteria for eligibility for a mortgage loan are the same as that of a loan against property.
Loan against property eligibility criteria
Lenders usually set slightly different eligibility parameters for a loan against property for salaried and self-employed individuals.
For salaried and professional applicants
- Candidates must be residing Indian citizens
- Age of applicants should be between 28-58 years
- Should have minimum 3 years of working experience in a public/private company or MNC.
For self-employed individuals
- Applicants must be citizens of India (NRIs not eligible)
- Should be of the age group 25-70
- Must have proof of business of minimum 5 years.
In both these cases, the upper age limit is the borrower’s age at the time of maturity of the loan.
In case eligible candidates wish to avail of a loan against property, they can first check the EMI of the loan beforehand to make an informed decision.
Loan against property interest calculator
Calculating the EMI of a property loan manually is a challenging and time-consuming task. This is why lenders provide an online calculator which is a tool that accurately performs these complex calculations within seconds.
Moreover, it also displays the overall interest, and total repayment amount with three simple details- the loan principal, repayment tenor, and the rate of interest.
After assessing these details, candidates can apply for a LAP online, which is an easy process.
Application for loan against property
Individuals can apply for a property loan from the online portal of their preferred loan provider in the following simple steps.
Step 1: Visit the website of your lender.
Step 2: Go to the loan against property application form and provide personal details such as name, contact details, date of birth, etc.
Step 3: Input the details of your income to select the best deals according to your financial standing.
Step 4: Click on ‘submit’ to complete the application process.
Eligible candidates can also check out various pre-approved offers that lenders provide on secured loans such as home loans and loans against property. These offers facilitate fast and smooth disbursal of the loan amount. Applicants can check these pre-approved offers by visiting the portal of the loan providers.
Mortgage loans vs loans against property have more similarities than differences. Although both these loans attract multiple benefits from lenders, applicants should carefully check their features to ensure they apply for the loan most suited to their needs.