Loan against property vs personal loan: Undoubtedly, having a sudden monetary crisis is one of the most common situations for almost every person. However, the crisis can be solved initially if the requirement is for a small amount of money. But in case of a huge amount, you won’t have many options except opting for a loan from any lending institution.
Now, if you’re in immediate need of some decent amount of funds, you can get many readily available options for fulfilling the needs. However, the most effective choices are opting for a personal loan or a loan against property. Well, getting clarity on loan against property vs personal loan is highly important in any manner. So, let’s dig a little deeper to know which would be the best-suited option for you; taking a personal loan or opting for a mortgage loan in India?
A Complete Guide to Personal Loan VS Mortgage Loan in India
What is A Personal Loan?
A personal loan is an unsecured loan offered by various lending institutions. In taking a personal loan, the lending institutions won’t ask for any collateral from the borrowers. However, the borrower can use the lending amount for fulfilling any of their purposes.
What is A Mortgage Loan?
On the contrary, a mortgage loan is a secured loan offered by various lending institutions. Therefore, while taking a mortgage loan, the borrower must provide certain collateral to the lending institutions.
Also Read: A Brief Guide to Second Mortgage Loan
Home Loan VS Mortgage Loan
Well, a few understand the difference between home loan and mortgage loan in India. However, it is important to get clarity on home loan vs mortgage loan before applying.
In order to get clarity on home loan vs mortgage loan, you must know that a home loan is typically for purchasing a residential construction, and also the home loan interest rate is much lower than a mortgage loan. Additionally, you get a mortgage loan against collateral and can do anything with the loan amount. Therefore, if you intend to purchase a home, you must consider applying for home loans to avail yourself of a lower home loan interest rate and other facilities.
Personal loan vs Mortgage Loan in India
Well, there are several other differences between loan against property vs personal loan. These two types of loans have their parameters for availing the loan facilities. Therefore, checking out the differences between loan against property vs personal loan can help you decide the best-suited option.
The Rate of Interest
Well, while opting for a loan facility, one of the essential things is to check the yearly rate of interest for sure.
While taking a mortgage loan, you need certain collateral to avail of the loan facilities under any circumstances. Therefore, for better security reasons, the interest rate is somehow much lower than a personal loan. The yearly mortgage loan interest rates can be 11% to 16%, depending upon different lending institutions.
On the contrary, the interest rate of a personal loan is comparatively higher than mortgage loan interest rates due to associated risk factors. The yearly rate of interest can be ranging between 11% to 24%.
An equated monthly installment depends on several factors. The overall amount of a loan, the tenure of the borrowing amount, and the interest rate are those unavoidable factors that can impact the equated monthly installments. Therefore, the calculated monthly installments can be hefty in an unsecured personal loan compared to a Mortgage loan in India.
The loan tenure can be a deciding factor while opting for a loan. For example, if you’re choosing a mortgage loan, there is a high possibility of getting a long time for repayments. The loan tenure can be ranging between 5 – 15 years for the repayment of liabilities.
However, you’ll get a maximum of 5 years of span for the repayments of the availed personal loan.
Well, LAP is the best available option when it comes to avail a large amount of loan. However, the loan amount in a mortgage loan depends on the collateral value. Generally, applicants can be offered up to 70% of the total collateral value as a loan. So, if you can mortgage a high-priced property, you can get a high amount of LAP for sure.
On the other hand, the personal loan amount mainly depends on monthly income and other substantial factors, like the borrower’s age, a decent credit score of the borrowing person and so on. However, the maximum loan amount cannot exceed 15 lakhs in any manner.
Due to the collateral factor, the processing of a mortgage loan takes less time to complete. However, in the personal loan, it can take many times to process the loan application.
So, the differences are quite understandable between a personal loan vs mortgage loan in india. Now it’s your turn to decide the best-suited option for you to get financial assistance from the lending institutions.