Home loans are provided in India by banks and housing finance companies with interest levels of 8.10% p.a. and above, with a period stretching to 30 years and up to 90% of the cost of the house as a loan. The choice of lender is significant, as many home loan schemes are available.

In this guide, a comprehensive comparison of home loans from the top 10 banks in India will list home loan interest rates, eligibility criteria, lending features, and unique benefits.

1. Top Banks for Home Loans in India (March 2025)

Note: Interest rates as of March 2025. Processing fees may vary.

2. Detailed Bank-Wise Analysis of Home Loans

A. SBI Home Loan

SBI is the largest home loan provider in India, offering special schemes for government employees, defense personnel, and NRIs.

B. HDFC Bank Home Loan

HDFC Bank provides tailor-made home loan solutions with special schemes for rural housing and self-employed individuals.

C. ICICI Bank Home Loan

ICICI Bank offers fast-track approvals and digital processing, along with pre-approved balance transfer facilities.

D. Axis Bank Home Loan

Axis Bank provides affordable housing loans with EMI waivers and overdraft features.

E. Kotak Mahindra Bank Home Loan

Kotak Mahindra Bank offers home loans with minimal documentation and special options for NRIs.

3. Key Features of Home Loans

4. Best Bank for Home Loans Based on Different Needs

Factors to Consider While Applying for a Home Loan

1. Total EMI Amount – EMIs consist of both principal and interest. Over time, the principal component increases while interest decreases.
2. Loan Tenure – Choose a loan tenure that matches your financial stability and income flow. Longer tenure reduces EMI but increases interest costs.
3. Interest Rate – The cost of borrowing depends on the principal amount and bank rates. Compare fixed and floating rates before applying.
4. Down Payment – A higher down payment (10-20%) reduces the loan amount and total interest burden. Some banks offer 100% financing but at higher costs.
5. Mortgage Insurance – Protects your family from loan repayment burden in case of an unforeseen event. Some banks make it mandatory.
6. Additional Fees – Includes processing fees, administrative charges, and service fees. Clarify these costs with the lender to manage your budget effectively.

5. Conclusion: Choosing the Right Home Loan Provider

Choosing the best bank for a home loan depends on interest rates, tenure, loan amount, processing fees, and special benefits.

For lowest interest rates: Union Bank of India & PNB

For high-value loans: Bank of Baroda

For digital loan processing: ICICI Bank & Axis Bank

For first-time home buyers: HDFC Bank & SBI

Before applying, compare home loan rates using an online home loan calculator to estimate EMIs, interest costs, and affordability.

You can take help of Refer Loan, a reputed Fintech firm with multiple lenders at one stop.

What is the difference between fixed and floating rates?

Fixed Rate – Interest remains constant.

Floating Rate – Varies with RBI policy changes.

Can I prepay my home loan?

Yes, partial or full prepayment is allowed. Floating-rate loans usually have no penalty.

Are home loans eligible for tax benefits?

Yes, under Section 80C (₹1.5 lakh on principal) and Section 24 (₹2 lakh on interest).

Who can be a co-applicant?

Spouse, parents, or major children.

What is Pre-EMI?

Interest paid until full loan disbursement.

Can I switch from a fixed to a floating rate?

Yes, but a conversion fee applies.

When does loan repayment start?

After full disbursement. Pre-EMI applies on partial disbursal.

Can I take two home loans at once?

Yes, if eligible. Tax benefits differ for the second home.

Can I get 100% home loan financing?

No, lenders finance only a portion of the property value.

Does a personal loan affect home loan eligibility?

Yes, ongoing loans impact your eligibility.

Can I buy a house with two loans?

No, taking two loans for the same property is fraudulent.

How do joint home loans work?

Co-applicants share ownership and loan responsibility.

In some situations, borrowers might be totally confused in making a decision. For important financing needs such as the purchase of a house or for higher education funding, there are two alternatives: home loan or LAP.

Both are secured but serve different purposes with unique pros and cons. This article will explore their differences, characteristics, benefits, and how to determine which option is best for your needs.

Home Loan vs. Loan Against Property: Key Differences

Bonus Insights 

• Risk of Property Seizure: Defaulting on LAP could lead to property loss. Home Loan default usually leads to restructuring before foreclosure.

• EMI Affordability: Home Loans offer smaller EMIs due to longer tenure, making repayment easier. LAP has a shorter tenure, leading to higher monthly EMIs.

• Ideal for Business Owners: If you’re a self-employed individual, LAP is a better option since it provides funds without end-use restrictions.

• Best for First-Time Home Buyers: A Home Loan is ideal for individuals looking to buy their first home and benefit from tax deductions.

Understanding Home Loan

A home loan aimed to aid individuals to purchase, construct, or rehabilitate a residence. The loan is secured by the property that is being constructed or acquired. This makes lenders consider it a safer loan. Such a condition allows longer repayment tenures and lower interest rates.

Example:

Ronit is going to purchase a new flat for ₹50 lakh. The Home Loan application has been approved for an amount of ₹40 lakh (80% of property value) at 8.5% interest rate for a tenure of 20 years. EMI will become approximately ₹ 34,587 each month.

Understanding Loan Against Property (LAP)

In the case of Loan Against Property, people put their existing properties to raise funds. These may be for their personal needs, business expansion, education, or health-related expenses. The loan amount is determined by the current market value of the property being pledged.

Key Features of LAP

• Purpose: Can be used for any legal financial need including business, education, medical expenses, or personal use.

• Loan Tenure: Typically ranges up to 15-20 years, shorter than home loans.

• Interest Rates: Higher than home loans, starting from 9.50% per annum.

• Tax Benefits: No tax benefits unless the loan is used for property purchase or construction.

• LTV Ratio: Lenders offer around 50%-75% of the property’s market value.

• Processing Time: Faster processing since the property is already owned.

Example:

The property worth₹1 crore owned by Prerna is her commercial property. She requires ₹50 lakhs for business expansion. For it, she has taken a Loan Against Property at an interest of 9.75% for 15 years. Now she has to pay an EMI of approximately ₹52,737 monthly.

Difference Between Home Loan and LAP

Interest Rate Comparison: Home Loan vs. LAP (Major Banks & NBFCs)

Making the Right Choice

The choice between a Home Loan and a LAP depends on your financial needs and goals.

Choose a Home Loan if:

• You are purchasing, constructing, or renovating a house.

• You want lower interest rates and longer tenure.

• You want to enjoy tax benefits on the loan amount.

Choose a Loan Against Property if:

• You need a large sum for business, education, medical, or personal use.

• You own a property and want to use it as collateral without selling it.

• You prefer a quicker approval process with flexible fund usage.

Conclusion

Loan Against Property is very beneficial in times of emergency; however, home loans are meant for long-term borrowers for lower interest rates, and tax benefits apply to these loans. Before deciding which one suits your purposes better, check the variation in interest rates, tax advantages, and other considerations along with your financial objectives and repayment capacity. The pre-purchase and purpose of that loan, reviewing the options, will surely create the accurate reflection of your financial objectives.

Are You Prepared to Submit an Application?

Compare lenders, assess your demands, and select the best loan offer. Thus you can guarantee your financial security free from needless stress.

FAQs 

Q: What are the basic eligibility requirements to be eligible for a home loan or LAP?

A: Both require stable income, good credit score, and property ownership (for LAP).

Q: Can I take a Loan Against Property without income proof?

A: Some lenders offer LAP based on property value but may charge higher interest rates.

Q: Is it possible to turn a loan secured by property into a home loan?

A: No, they are separate lending products with unique requirements and objectives.

Q: Which loan has lower EMI – Home Loan or LAP?

A: Home Loan has lower EMIs due to longer tenure and lower interest rates.

Q: Does LAP affect my home ownership?

A: No, but defaulting on payments can lead to property seizure by the lender.

Make a wise decision and secure your financial future with the right loan choice!

Home loans are provided in India by banks and housing finance companies with interest levels of 8.10% p.a. and above, with a period stretching to 30 years and up to 90% of the cost of the house as a loan. The choice of lender is significant, as many home loan schemes are available.

In this guide, a comprehensive comparison of home loans from the top 10 banks in India will list home loan interest rates, eligibility criteria, lending features, and unique benefits.

1. Top Banks for Home Loans in India (March 2025)

Note: Interest rates as of March 2025. Processing fees may vary.

2. Detailed Bank-Wise Analysis of Home Loans

A. SBI Home Loan

SBI is the largest home loan provider in India, offering special schemes for government employees, defense personnel, and NRIs.

B. HDFC Bank Home Loan

HDFC Bank provides tailor-made home loan solutions with special schemes for rural housing and self-employed individuals.

C. ICICI Bank Home Loan

ICICI Bank offers fast-track approvals and digital processing, along with pre-approved balance transfer facilities.

D. Axis Bank Home Loan

Axis Bank provides affordable housing loans with EMI waivers and overdraft features.

E. Kotak Mahindra Bank Home Loan

Kotak Mahindra Bank offers home loans with minimal documentation and special options for NRIs.

3. Key Features of Home Loans

4. Best Bank for Home Loans Based on Different Needs

Factors to Consider While Applying for a Home Loan

1. Total EMI Amount – EMIs consist of both principal and interest. Over time, the principal component increases while interest decreases.
2. Loan Tenure – Choose a loan tenure that matches your financial stability and income flow. Longer tenure reduces EMI but increases interest costs.
3. Interest Rate – The cost of borrowing depends on the principal amount and bank rates. Compare fixed and floating rates before applying.
4. Down Payment – A higher down payment (10-20%) reduces the loan amount and total interest burden. Some banks offer 100% financing but at higher costs.
5. Mortgage Insurance – Protects your family from loan repayment burden in case of an unforeseen event. Some banks make it mandatory.
6. Additional Fees – Includes processing fees, administrative charges, and service fees. Clarify these costs with the lender to manage your budget effectively.

5. Conclusion: Choosing the Right Home Loan Provider

Choosing the best bank for a home loan depends on interest rates, tenure, loan amount, processing fees, and special benefits.

For lowest interest rates: Union Bank of India & PNB

For high-value loans: Bank of Baroda

For digital loan processing: ICICI Bank & Axis Bank

For first-time home buyers: HDFC Bank & SBI

Before applying, compare home loan rates using an online home loan calculator to estimate EMIs, interest costs, and affordability.

You can take help of Refer Loan, a reputed Fintech firm with multiple lenders at one stop.

What is the difference between fixed and floating rates?

Fixed Rate – Interest remains constant.

Floating Rate – Varies with RBI policy changes.

Can I prepay my home loan?

Yes, partial or full prepayment is allowed. Floating-rate loans usually have no penalty.

Are home loans eligible for tax benefits?

Yes, under Section 80C (₹1.5 lakh on principal) and Section 24 (₹2 lakh on interest).

Who can be a co-applicant?

Spouse, parents, or major children.

What is Pre-EMI?

Interest paid until full loan disbursement.

Can I switch from a fixed to a floating rate?

Yes, but a conversion fee applies.

When does loan repayment start?

After full disbursement. Pre-EMI applies on partial disbursal.

Can I take two home loans at once?

Yes, if eligible. Tax benefits differ for the second home.

Can I get 100% home loan financing?

No, lenders finance only a portion of the property value.

Does a personal loan affect home loan eligibility?

Yes, ongoing loans impact your eligibility.

Can I buy a house with two loans?

No, taking two loans for the same property is fraudulent.

How do joint home loans work?

Co-applicants share ownership and loan responsibility.

In some situations, borrowers might be totally confused in making a decision. For important financing needs such as the purchase of a house or for higher education funding, there are two alternatives: home loan or LAP.

Both are secured but serve different purposes with unique pros and cons. This article will explore their differences, characteristics, benefits, and how to determine which option is best for your needs.

Home Loan vs. Loan Against Property: Key Differences

Bonus Insights 

• Risk of Property Seizure: Defaulting on LAP could lead to property loss. Home Loan default usually leads to restructuring before foreclosure.

• EMI Affordability: Home Loans offer smaller EMIs due to longer tenure, making repayment easier. LAP has a shorter tenure, leading to higher monthly EMIs.

• Ideal for Business Owners: If you’re a self-employed individual, LAP is a better option since it provides funds without end-use restrictions.

• Best for First-Time Home Buyers: A Home Loan is ideal for individuals looking to buy their first home and benefit from tax deductions.

Understanding Home Loan

A home loan aimed to aid individuals to purchase, construct, or rehabilitate a residence. The loan is secured by the property that is being constructed or acquired. This makes lenders consider it a safer loan. Such a condition allows longer repayment tenures and lower interest rates.

Example:

Ronit is going to purchase a new flat for ₹50 lakh. The Home Loan application has been approved for an amount of ₹40 lakh (80% of property value) at 8.5% interest rate for a tenure of 20 years. EMI will become approximately ₹ 34,587 each month.

Understanding Loan Against Property (LAP)

In the case of Loan Against Property, people put their existing properties to raise funds. These may be for their personal needs, business expansion, education, or health-related expenses. The loan amount is determined by the current market value of the property being pledged.

Key Features of LAP

• Purpose: Can be used for any legal financial need including business, education, medical expenses, or personal use.

• Loan Tenure: Typically ranges up to 15-20 years, shorter than home loans.

• Interest Rates: Higher than home loans, starting from 9.50% per annum.

• Tax Benefits: No tax benefits unless the loan is used for property purchase or construction.

• LTV Ratio: Lenders offer around 50%-75% of the property’s market value.

• Processing Time: Faster processing since the property is already owned.

Example:

The property worth₹1 crore owned by Prerna is her commercial property. She requires ₹50 lakhs for business expansion. For it, she has taken a Loan Against Property at an interest of 9.75% for 15 years. Now she has to pay an EMI of approximately ₹52,737 monthly.

Difference Between Home Loan and LAP

Interest Rate Comparison: Home Loan vs. LAP (Major Banks & NBFCs)

Making the Right Choice

The choice between a Home Loan and a LAP depends on your financial needs and goals.

Choose a Home Loan if:

• You are purchasing, constructing, or renovating a house.

• You want lower interest rates and longer tenure.

• You want to enjoy tax benefits on the loan amount.

Choose a Loan Against Property if:

• You need a large sum for business, education, medical, or personal use.

• You own a property and want to use it as collateral without selling it.

• You prefer a quicker approval process with flexible fund usage.

Conclusion

Loan Against Property is very beneficial in times of emergency; however, home loans are meant for long-term borrowers for lower interest rates, and tax benefits apply to these loans. Before deciding which one suits your purposes better, check the variation in interest rates, tax advantages, and other considerations along with your financial objectives and repayment capacity. The pre-purchase and purpose of that loan, reviewing the options, will surely create the accurate reflection of your financial objectives.

Are You Prepared to Submit an Application?

Compare lenders, assess your demands, and select the best loan offer. Thus you can guarantee your financial security free from needless stress.

FAQs 

Q: What are the basic eligibility requirements to be eligible for a home loan or LAP?

A: Both require stable income, good credit score, and property ownership (for LAP).

Q: Can I take a Loan Against Property without income proof?

A: Some lenders offer LAP based on property value but may charge higher interest rates.

Q: Is it possible to turn a loan secured by property into a home loan?

A: No, they are separate lending products with unique requirements and objectives.

Q: Which loan has lower EMI – Home Loan or LAP?

A: Home Loan has lower EMIs due to longer tenure and lower interest rates.

Q: Does LAP affect my home ownership?

A: No, but defaulting on payments can lead to property seizure by the lender.

Make a wise decision and secure your financial future with the right loan choice!

Home loans are provided in India by banks and housing finance companies with interest levels of 8.10% p.a. and above, with a period stretching to 30 years and up to 90% of the cost of the house as a loan. The choice of lender is significant, as many home loan schemes are available.

In this guide, a comprehensive comparison of home loans from the top 10 banks in India will list home loan interest rates, eligibility criteria, lending features, and unique benefits.

1. Top Banks for Home Loans in India (March 2025)

Note: Interest rates as of March 2025. Processing fees may vary.

2. Detailed Bank-Wise Analysis of Home Loans

A. SBI Home Loan

SBI is the largest home loan provider in India, offering special schemes for government employees, defense personnel, and NRIs.

B. HDFC Bank Home Loan

HDFC Bank provides tailor-made home loan solutions with special schemes for rural housing and self-employed individuals.

C. ICICI Bank Home Loan

ICICI Bank offers fast-track approvals and digital processing, along with pre-approved balance transfer facilities.

D. Axis Bank Home Loan

Axis Bank provides affordable housing loans with EMI waivers and overdraft features.

E. Kotak Mahindra Bank Home Loan

Kotak Mahindra Bank offers home loans with minimal documentation and special options for NRIs.

3. Key Features of Home Loans

4. Best Bank for Home Loans Based on Different Needs

Factors to Consider While Applying for a Home Loan

1. Total EMI Amount – EMIs consist of both principal and interest. Over time, the principal component increases while interest decreases.
2. Loan Tenure – Choose a loan tenure that matches your financial stability and income flow. Longer tenure reduces EMI but increases interest costs.
3. Interest Rate – The cost of borrowing depends on the principal amount and bank rates. Compare fixed and floating rates before applying.
4. Down Payment – A higher down payment (10-20%) reduces the loan amount and total interest burden. Some banks offer 100% financing but at higher costs.
5. Mortgage Insurance – Protects your family from loan repayment burden in case of an unforeseen event. Some banks make it mandatory.
6. Additional Fees – Includes processing fees, administrative charges, and service fees. Clarify these costs with the lender to manage your budget effectively.

5. Conclusion: Choosing the Right Home Loan Provider

Choosing the best bank for a home loan depends on interest rates, tenure, loan amount, processing fees, and special benefits.

For lowest interest rates: Union Bank of India & PNB

For high-value loans: Bank of Baroda

For digital loan processing: ICICI Bank & Axis Bank

For first-time home buyers: HDFC Bank & SBI

Before applying, compare home loan rates using an online home loan calculator to estimate EMIs, interest costs, and affordability.

You can take help of Refer Loan, a reputed Fintech firm with multiple lenders at one stop.

What is the difference between fixed and floating rates?

Fixed Rate – Interest remains constant.

Floating Rate – Varies with RBI policy changes.

Can I prepay my home loan?

Yes, partial or full prepayment is allowed. Floating-rate loans usually have no penalty.

Are home loans eligible for tax benefits?

Yes, under Section 80C (₹1.5 lakh on principal) and Section 24 (₹2 lakh on interest).

Who can be a co-applicant?

Spouse, parents, or major children.

What is Pre-EMI?

Interest paid until full loan disbursement.

Can I switch from a fixed to a floating rate?

Yes, but a conversion fee applies.

When does loan repayment start?

After full disbursement. Pre-EMI applies on partial disbursal.

Can I take two home loans at once?

Yes, if eligible. Tax benefits differ for the second home.

Can I get 100% home loan financing?

No, lenders finance only a portion of the property value.

Does a personal loan affect home loan eligibility?

Yes, ongoing loans impact your eligibility.

Can I buy a house with two loans?

No, taking two loans for the same property is fraudulent.

How do joint home loans work?

Co-applicants share ownership and loan responsibility.

In some situations, borrowers might be totally confused in making a decision. For important financing needs such as the purchase of a house or for higher education funding, there are two alternatives: home loan or LAP.

Both are secured but serve different purposes with unique pros and cons. This article will explore their differences, characteristics, benefits, and how to determine which option is best for your needs.

Home Loan vs. Loan Against Property: Key Differences

Bonus Insights 

• Risk of Property Seizure: Defaulting on LAP could lead to property loss. Home Loan default usually leads to restructuring before foreclosure.

• EMI Affordability: Home Loans offer smaller EMIs due to longer tenure, making repayment easier. LAP has a shorter tenure, leading to higher monthly EMIs.

• Ideal for Business Owners: If you’re a self-employed individual, LAP is a better option since it provides funds without end-use restrictions.

• Best for First-Time Home Buyers: A Home Loan is ideal for individuals looking to buy their first home and benefit from tax deductions.

Understanding Home Loan

A home loan aimed to aid individuals to purchase, construct, or rehabilitate a residence. The loan is secured by the property that is being constructed or acquired. This makes lenders consider it a safer loan. Such a condition allows longer repayment tenures and lower interest rates.

Example:

Ronit is going to purchase a new flat for ₹50 lakh. The Home Loan application has been approved for an amount of ₹40 lakh (80% of property value) at 8.5% interest rate for a tenure of 20 years. EMI will become approximately ₹ 34,587 each month.

Understanding Loan Against Property (LAP)

In the case of Loan Against Property, people put their existing properties to raise funds. These may be for their personal needs, business expansion, education, or health-related expenses. The loan amount is determined by the current market value of the property being pledged.

Key Features of LAP

• Purpose: Can be used for any legal financial need including business, education, medical expenses, or personal use.

• Loan Tenure: Typically ranges up to 15-20 years, shorter than home loans.

• Interest Rates: Higher than home loans, starting from 9.50% per annum.

• Tax Benefits: No tax benefits unless the loan is used for property purchase or construction.

• LTV Ratio: Lenders offer around 50%-75% of the property’s market value.

• Processing Time: Faster processing since the property is already owned.

Example:

The property worth₹1 crore owned by Prerna is her commercial property. She requires ₹50 lakhs for business expansion. For it, she has taken a Loan Against Property at an interest of 9.75% for 15 years. Now she has to pay an EMI of approximately ₹52,737 monthly.

Difference Between Home Loan and LAP

Interest Rate Comparison: Home Loan vs. LAP (Major Banks & NBFCs)

Making the Right Choice

The choice between a Home Loan and a LAP depends on your financial needs and goals.

Choose a Home Loan if:

• You are purchasing, constructing, or renovating a house.

• You want lower interest rates and longer tenure.

• You want to enjoy tax benefits on the loan amount.

Choose a Loan Against Property if:

• You need a large sum for business, education, medical, or personal use.

• You own a property and want to use it as collateral without selling it.

• You prefer a quicker approval process with flexible fund usage.

Conclusion

Loan Against Property is very beneficial in times of emergency; however, home loans are meant for long-term borrowers for lower interest rates, and tax benefits apply to these loans. Before deciding which one suits your purposes better, check the variation in interest rates, tax advantages, and other considerations along with your financial objectives and repayment capacity. The pre-purchase and purpose of that loan, reviewing the options, will surely create the accurate reflection of your financial objectives.

Are You Prepared to Submit an Application?

Compare lenders, assess your demands, and select the best loan offer. Thus you can guarantee your financial security free from needless stress.

FAQs 

Q: What are the basic eligibility requirements to be eligible for a home loan or LAP?

A: Both require stable income, good credit score, and property ownership (for LAP).

Q: Can I take a Loan Against Property without income proof?

A: Some lenders offer LAP based on property value but may charge higher interest rates.

Q: Is it possible to turn a loan secured by property into a home loan?

A: No, they are separate lending products with unique requirements and objectives.

Q: Which loan has lower EMI – Home Loan or LAP?

A: Home Loan has lower EMIs due to longer tenure and lower interest rates.

Q: Does LAP affect my home ownership?

A: No, but defaulting on payments can lead to property seizure by the lender.

Make a wise decision and secure your financial future with the right loan choice!

Home loans are provided in India by banks and housing finance companies with interest levels of 8.10% p.a. and above, with a period stretching to 30 years and up to 90% of the cost of the house as a loan. The choice of lender is significant, as many home loan schemes are available.

In this guide, a comprehensive comparison of home loans from the top 10 banks in India will list home loan interest rates, eligibility criteria, lending features, and unique benefits.

1. Top Banks for Home Loans in India (March 2025)

Note: Interest rates as of March 2025. Processing fees may vary.

2. Detailed Bank-Wise Analysis of Home Loans

A. SBI Home Loan

SBI is the largest home loan provider in India, offering special schemes for government employees, defense personnel, and NRIs.

B. HDFC Bank Home Loan

HDFC Bank provides tailor-made home loan solutions with special schemes for rural housing and self-employed individuals.

C. ICICI Bank Home Loan

ICICI Bank offers fast-track approvals and digital processing, along with pre-approved balance transfer facilities.

D. Axis Bank Home Loan

Axis Bank provides affordable housing loans with EMI waivers and overdraft features.

E. Kotak Mahindra Bank Home Loan

Kotak Mahindra Bank offers home loans with minimal documentation and special options for NRIs.

3. Key Features of Home Loans

4. Best Bank for Home Loans Based on Different Needs

Factors to Consider While Applying for a Home Loan

1. Total EMI Amount – EMIs consist of both principal and interest. Over time, the principal component increases while interest decreases.
2. Loan Tenure – Choose a loan tenure that matches your financial stability and income flow. Longer tenure reduces EMI but increases interest costs.
3. Interest Rate – The cost of borrowing depends on the principal amount and bank rates. Compare fixed and floating rates before applying.
4. Down Payment – A higher down payment (10-20%) reduces the loan amount and total interest burden. Some banks offer 100% financing but at higher costs.
5. Mortgage Insurance – Protects your family from loan repayment burden in case of an unforeseen event. Some banks make it mandatory.
6. Additional Fees – Includes processing fees, administrative charges, and service fees. Clarify these costs with the lender to manage your budget effectively.

5. Conclusion: Choosing the Right Home Loan Provider

Choosing the best bank for a home loan depends on interest rates, tenure, loan amount, processing fees, and special benefits.

For lowest interest rates: Union Bank of India & PNB

For high-value loans: Bank of Baroda

For digital loan processing: ICICI Bank & Axis Bank

For first-time home buyers: HDFC Bank & SBI

Before applying, compare home loan rates using an online home loan calculator to estimate EMIs, interest costs, and affordability.

You can take help of Refer Loan, a reputed Fintech firm with multiple lenders at one stop.

What is the difference between fixed and floating rates?

Fixed Rate – Interest remains constant.

Floating Rate – Varies with RBI policy changes.

Can I prepay my home loan?

Yes, partial or full prepayment is allowed. Floating-rate loans usually have no penalty.

Are home loans eligible for tax benefits?

Yes, under Section 80C (₹1.5 lakh on principal) and Section 24 (₹2 lakh on interest).

Who can be a co-applicant?

Spouse, parents, or major children.

What is Pre-EMI?

Interest paid until full loan disbursement.

Can I switch from a fixed to a floating rate?

Yes, but a conversion fee applies.

When does loan repayment start?

After full disbursement. Pre-EMI applies on partial disbursal.

Can I take two home loans at once?

Yes, if eligible. Tax benefits differ for the second home.

Can I get 100% home loan financing?

No, lenders finance only a portion of the property value.

Does a personal loan affect home loan eligibility?

Yes, ongoing loans impact your eligibility.

Can I buy a house with two loans?

No, taking two loans for the same property is fraudulent.

How do joint home loans work?

Co-applicants share ownership and loan responsibility.

In some situations, borrowers might be totally confused in making a decision. For important financing needs such as the purchase of a house or for higher education funding, there are two alternatives: home loan or LAP.

Both are secured but serve different purposes with unique pros and cons. This article will explore their differences, characteristics, benefits, and how to determine which option is best for your needs.

Home Loan vs. Loan Against Property: Key Differences

Bonus Insights 

• Risk of Property Seizure: Defaulting on LAP could lead to property loss. Home Loan default usually leads to restructuring before foreclosure.

• EMI Affordability: Home Loans offer smaller EMIs due to longer tenure, making repayment easier. LAP has a shorter tenure, leading to higher monthly EMIs.

• Ideal for Business Owners: If you’re a self-employed individual, LAP is a better option since it provides funds without end-use restrictions.

• Best for First-Time Home Buyers: A Home Loan is ideal for individuals looking to buy their first home and benefit from tax deductions.

Understanding Home Loan

A home loan aimed to aid individuals to purchase, construct, or rehabilitate a residence. The loan is secured by the property that is being constructed or acquired. This makes lenders consider it a safer loan. Such a condition allows longer repayment tenures and lower interest rates.

Example:

Ronit is going to purchase a new flat for ₹50 lakh. The Home Loan application has been approved for an amount of ₹40 lakh (80% of property value) at 8.5% interest rate for a tenure of 20 years. EMI will become approximately ₹ 34,587 each month.

Understanding Loan Against Property (LAP)

In the case of Loan Against Property, people put their existing properties to raise funds. These may be for their personal needs, business expansion, education, or health-related expenses. The loan amount is determined by the current market value of the property being pledged.

Key Features of LAP

• Purpose: Can be used for any legal financial need including business, education, medical expenses, or personal use.

• Loan Tenure: Typically ranges up to 15-20 years, shorter than home loans.

• Interest Rates: Higher than home loans, starting from 9.50% per annum.

• Tax Benefits: No tax benefits unless the loan is used for property purchase or construction.

• LTV Ratio: Lenders offer around 50%-75% of the property’s market value.

• Processing Time: Faster processing since the property is already owned.

Example:

The property worth₹1 crore owned by Prerna is her commercial property. She requires ₹50 lakhs for business expansion. For it, she has taken a Loan Against Property at an interest of 9.75% for 15 years. Now she has to pay an EMI of approximately ₹52,737 monthly.

Difference Between Home Loan and LAP

Interest Rate Comparison: Home Loan vs. LAP (Major Banks & NBFCs)

Making the Right Choice

The choice between a Home Loan and a LAP depends on your financial needs and goals.

Choose a Home Loan if:

• You are purchasing, constructing, or renovating a house.

• You want lower interest rates and longer tenure.

• You want to enjoy tax benefits on the loan amount.

Choose a Loan Against Property if:

• You need a large sum for business, education, medical, or personal use.

• You own a property and want to use it as collateral without selling it.

• You prefer a quicker approval process with flexible fund usage.

Conclusion

Loan Against Property is very beneficial in times of emergency; however, home loans are meant for long-term borrowers for lower interest rates, and tax benefits apply to these loans. Before deciding which one suits your purposes better, check the variation in interest rates, tax advantages, and other considerations along with your financial objectives and repayment capacity. The pre-purchase and purpose of that loan, reviewing the options, will surely create the accurate reflection of your financial objectives.

Are You Prepared to Submit an Application?

Compare lenders, assess your demands, and select the best loan offer. Thus you can guarantee your financial security free from needless stress.

FAQs 

Q: What are the basic eligibility requirements to be eligible for a home loan or LAP?

A: Both require stable income, good credit score, and property ownership (for LAP).

Q: Can I take a Loan Against Property without income proof?

A: Some lenders offer LAP based on property value but may charge higher interest rates.

Q: Is it possible to turn a loan secured by property into a home loan?

A: No, they are separate lending products with unique requirements and objectives.

Q: Which loan has lower EMI – Home Loan or LAP?

A: Home Loan has lower EMIs due to longer tenure and lower interest rates.

Q: Does LAP affect my home ownership?

A: No, but defaulting on payments can lead to property seizure by the lender.

Make a wise decision and secure your financial future with the right loan choice!

Home loans are provided in India by banks and housing finance companies with interest levels of 8.10% p.a. and above, with a period stretching to 30 years and up to 90% of the cost of the house as a loan. The choice of lender is significant, as many home loan schemes are available.

In this guide, a comprehensive comparison of home loans from the top 10 banks in India will list home loan interest rates, eligibility criteria, lending features, and unique benefits.

1. Top Banks for Home Loans in India (March 2025)

Note: Interest rates as of March 2025. Processing fees may vary.

2. Detailed Bank-Wise Analysis of Home Loans

A. SBI Home Loan

SBI is the largest home loan provider in India, offering special schemes for government employees, defense personnel, and NRIs.

B. HDFC Bank Home Loan

HDFC Bank provides tailor-made home loan solutions with special schemes for rural housing and self-employed individuals.

C. ICICI Bank Home Loan

ICICI Bank offers fast-track approvals and digital processing, along with pre-approved balance transfer facilities.

D. Axis Bank Home Loan

Axis Bank provides affordable housing loans with EMI waivers and overdraft features.

E. Kotak Mahindra Bank Home Loan

Kotak Mahindra Bank offers home loans with minimal documentation and special options for NRIs.

3. Key Features of Home Loans

4. Best Bank for Home Loans Based on Different Needs

Factors to Consider While Applying for a Home Loan

1. Total EMI Amount – EMIs consist of both principal and interest. Over time, the principal component increases while interest decreases.
2. Loan Tenure – Choose a loan tenure that matches your financial stability and income flow. Longer tenure reduces EMI but increases interest costs.
3. Interest Rate – The cost of borrowing depends on the principal amount and bank rates. Compare fixed and floating rates before applying.
4. Down Payment – A higher down payment (10-20%) reduces the loan amount and total interest burden. Some banks offer 100% financing but at higher costs.
5. Mortgage Insurance – Protects your family from loan repayment burden in case of an unforeseen event. Some banks make it mandatory.
6. Additional Fees – Includes processing fees, administrative charges, and service fees. Clarify these costs with the lender to manage your budget effectively.

5. Conclusion: Choosing the Right Home Loan Provider

Choosing the best bank for a home loan depends on interest rates, tenure, loan amount, processing fees, and special benefits.

For lowest interest rates: Union Bank of India & PNB

For high-value loans: Bank of Baroda

For digital loan processing: ICICI Bank & Axis Bank

For first-time home buyers: HDFC Bank & SBI

Before applying, compare home loan rates using an online home loan calculator to estimate EMIs, interest costs, and affordability.

You can take help of Refer Loan, a reputed Fintech firm with multiple lenders at one stop.

What is the difference between fixed and floating rates?

Fixed Rate – Interest remains constant.

Floating Rate – Varies with RBI policy changes.

Can I prepay my home loan?

Yes, partial or full prepayment is allowed. Floating-rate loans usually have no penalty.

Are home loans eligible for tax benefits?

Yes, under Section 80C (₹1.5 lakh on principal) and Section 24 (₹2 lakh on interest).

Who can be a co-applicant?

Spouse, parents, or major children.

What is Pre-EMI?

Interest paid until full loan disbursement.

Can I switch from a fixed to a floating rate?

Yes, but a conversion fee applies.

When does loan repayment start?

After full disbursement. Pre-EMI applies on partial disbursal.

Can I take two home loans at once?

Yes, if eligible. Tax benefits differ for the second home.

Can I get 100% home loan financing?

No, lenders finance only a portion of the property value.

Does a personal loan affect home loan eligibility?

Yes, ongoing loans impact your eligibility.

Can I buy a house with two loans?

No, taking two loans for the same property is fraudulent.

How do joint home loans work?

Co-applicants share ownership and loan responsibility.

In some situations, borrowers might be totally confused in making a decision. For important financing needs such as the purchase of a house or for higher education funding, there are two alternatives: home loan or LAP.

Both are secured but serve different purposes with unique pros and cons. This article will explore their differences, characteristics, benefits, and how to determine which option is best for your needs.

Home Loan vs. Loan Against Property: Key Differences

Bonus Insights 

• Risk of Property Seizure: Defaulting on LAP could lead to property loss. Home Loan default usually leads to restructuring before foreclosure.

• EMI Affordability: Home Loans offer smaller EMIs due to longer tenure, making repayment easier. LAP has a shorter tenure, leading to higher monthly EMIs.

• Ideal for Business Owners: If you’re a self-employed individual, LAP is a better option since it provides funds without end-use restrictions.

• Best for First-Time Home Buyers: A Home Loan is ideal for individuals looking to buy their first home and benefit from tax deductions.

Understanding Home Loan

A home loan aimed to aid individuals to purchase, construct, or rehabilitate a residence. The loan is secured by the property that is being constructed or acquired. This makes lenders consider it a safer loan. Such a condition allows longer repayment tenures and lower interest rates.

Example:

Ronit is going to purchase a new flat for ₹50 lakh. The Home Loan application has been approved for an amount of ₹40 lakh (80% of property value) at 8.5% interest rate for a tenure of 20 years. EMI will become approximately ₹ 34,587 each month.

Understanding Loan Against Property (LAP)

In the case of Loan Against Property, people put their existing properties to raise funds. These may be for their personal needs, business expansion, education, or health-related expenses. The loan amount is determined by the current market value of the property being pledged.

Key Features of LAP

• Purpose: Can be used for any legal financial need including business, education, medical expenses, or personal use.

• Loan Tenure: Typically ranges up to 15-20 years, shorter than home loans.

• Interest Rates: Higher than home loans, starting from 9.50% per annum.

• Tax Benefits: No tax benefits unless the loan is used for property purchase or construction.

• LTV Ratio: Lenders offer around 50%-75% of the property’s market value.

• Processing Time: Faster processing since the property is already owned.

Example:

The property worth₹1 crore owned by Prerna is her commercial property. She requires ₹50 lakhs for business expansion. For it, she has taken a Loan Against Property at an interest of 9.75% for 15 years. Now she has to pay an EMI of approximately ₹52,737 monthly.

Difference Between Home Loan and LAP

Interest Rate Comparison: Home Loan vs. LAP (Major Banks & NBFCs)

Making the Right Choice

The choice between a Home Loan and a LAP depends on your financial needs and goals.

Choose a Home Loan if:

• You are purchasing, constructing, or renovating a house.

• You want lower interest rates and longer tenure.

• You want to enjoy tax benefits on the loan amount.

Choose a Loan Against Property if:

• You need a large sum for business, education, medical, or personal use.

• You own a property and want to use it as collateral without selling it.

• You prefer a quicker approval process with flexible fund usage.

Conclusion

Loan Against Property is very beneficial in times of emergency; however, home loans are meant for long-term borrowers for lower interest rates, and tax benefits apply to these loans. Before deciding which one suits your purposes better, check the variation in interest rates, tax advantages, and other considerations along with your financial objectives and repayment capacity. The pre-purchase and purpose of that loan, reviewing the options, will surely create the accurate reflection of your financial objectives.

Are You Prepared to Submit an Application?

Compare lenders, assess your demands, and select the best loan offer. Thus you can guarantee your financial security free from needless stress.

FAQs 

Q: What are the basic eligibility requirements to be eligible for a home loan or LAP?

A: Both require stable income, good credit score, and property ownership (for LAP).

Q: Can I take a Loan Against Property without income proof?

A: Some lenders offer LAP based on property value but may charge higher interest rates.

Q: Is it possible to turn a loan secured by property into a home loan?

A: No, they are separate lending products with unique requirements and objectives.

Q: Which loan has lower EMI – Home Loan or LAP?

A: Home Loan has lower EMIs due to longer tenure and lower interest rates.

Q: Does LAP affect my home ownership?

A: No, but defaulting on payments can lead to property seizure by the lender.

Make a wise decision and secure your financial future with the right loan choice!

Home loans are provided in India by banks and housing finance companies with interest levels of 8.10% p.a. and above, with a period stretching to 30 years and up to 90% of the cost of the house as a loan. The choice of lender is significant, as many home loan schemes are available.

In this guide, a comprehensive comparison of home loans from the top 10 banks in India will list home loan interest rates, eligibility criteria, lending features, and unique benefits.

1. Top Banks for Home Loans in India (March 2025)

Note: Interest rates as of March 2025. Processing fees may vary.

2. Detailed Bank-Wise Analysis of Home Loans

A. SBI Home Loan

SBI is the largest home loan provider in India, offering special schemes for government employees, defense personnel, and NRIs.

B. HDFC Bank Home Loan

HDFC Bank provides tailor-made home loan solutions with special schemes for rural housing and self-employed individuals.

C. ICICI Bank Home Loan

ICICI Bank offers fast-track approvals and digital processing, along with pre-approved balance transfer facilities.

D. Axis Bank Home Loan

Axis Bank provides affordable housing loans with EMI waivers and overdraft features.

E. Kotak Mahindra Bank Home Loan

Kotak Mahindra Bank offers home loans with minimal documentation and special options for NRIs.

3. Key Features of Home Loans

4. Best Bank for Home Loans Based on Different Needs

Factors to Consider While Applying for a Home Loan

1. Total EMI Amount – EMIs consist of both principal and interest. Over time, the principal component increases while interest decreases.
2. Loan Tenure – Choose a loan tenure that matches your financial stability and income flow. Longer tenure reduces EMI but increases interest costs.
3. Interest Rate – The cost of borrowing depends on the principal amount and bank rates. Compare fixed and floating rates before applying.
4. Down Payment – A higher down payment (10-20%) reduces the loan amount and total interest burden. Some banks offer 100% financing but at higher costs.
5. Mortgage Insurance – Protects your family from loan repayment burden in case of an unforeseen event. Some banks make it mandatory.
6. Additional Fees – Includes processing fees, administrative charges, and service fees. Clarify these costs with the lender to manage your budget effectively.

5. Conclusion: Choosing the Right Home Loan Provider

Choosing the best bank for a home loan depends on interest rates, tenure, loan amount, processing fees, and special benefits.

For lowest interest rates: Union Bank of India & PNB

For high-value loans: Bank of Baroda

For digital loan processing: ICICI Bank & Axis Bank

For first-time home buyers: HDFC Bank & SBI

Before applying, compare home loan rates using an online home loan calculator to estimate EMIs, interest costs, and affordability.

You can take help of Refer Loan, a reputed Fintech firm with multiple lenders at one stop.

What is the difference between fixed and floating rates?

Fixed Rate – Interest remains constant.

Floating Rate – Varies with RBI policy changes.

Can I prepay my home loan?

Yes, partial or full prepayment is allowed. Floating-rate loans usually have no penalty.

Are home loans eligible for tax benefits?

Yes, under Section 80C (₹1.5 lakh on principal) and Section 24 (₹2 lakh on interest).

Who can be a co-applicant?

Spouse, parents, or major children.

What is Pre-EMI?

Interest paid until full loan disbursement.

Can I switch from a fixed to a floating rate?

Yes, but a conversion fee applies.

When does loan repayment start?

After full disbursement. Pre-EMI applies on partial disbursal.

Can I take two home loans at once?

Yes, if eligible. Tax benefits differ for the second home.

Can I get 100% home loan financing?

No, lenders finance only a portion of the property value.

Does a personal loan affect home loan eligibility?

Yes, ongoing loans impact your eligibility.

Can I buy a house with two loans?

No, taking two loans for the same property is fraudulent.

How do joint home loans work?

Co-applicants share ownership and loan responsibility.

In some situations, borrowers might be totally confused in making a decision. For important financing needs such as the purchase of a house or for higher education funding, there are two alternatives: home loan or LAP.

Both are secured but serve different purposes with unique pros and cons. This article will explore their differences, characteristics, benefits, and how to determine which option is best for your needs.

Home Loan vs. Loan Against Property: Key Differences

Bonus Insights 

• Risk of Property Seizure: Defaulting on LAP could lead to property loss. Home Loan default usually leads to restructuring before foreclosure.

• EMI Affordability: Home Loans offer smaller EMIs due to longer tenure, making repayment easier. LAP has a shorter tenure, leading to higher monthly EMIs.

• Ideal for Business Owners: If you’re a self-employed individual, LAP is a better option since it provides funds without end-use restrictions.

• Best for First-Time Home Buyers: A Home Loan is ideal for individuals looking to buy their first home and benefit from tax deductions.

Understanding Home Loan

A home loan aimed to aid individuals to purchase, construct, or rehabilitate a residence. The loan is secured by the property that is being constructed or acquired. This makes lenders consider it a safer loan. Such a condition allows longer repayment tenures and lower interest rates.

Example:

Ronit is going to purchase a new flat for ₹50 lakh. The Home Loan application has been approved for an amount of ₹40 lakh (80% of property value) at 8.5% interest rate for a tenure of 20 years. EMI will become approximately ₹ 34,587 each month.

Understanding Loan Against Property (LAP)

In the case of Loan Against Property, people put their existing properties to raise funds. These may be for their personal needs, business expansion, education, or health-related expenses. The loan amount is determined by the current market value of the property being pledged.

Key Features of LAP

• Purpose: Can be used for any legal financial need including business, education, medical expenses, or personal use.

• Loan Tenure: Typically ranges up to 15-20 years, shorter than home loans.

• Interest Rates: Higher than home loans, starting from 9.50% per annum.

• Tax Benefits: No tax benefits unless the loan is used for property purchase or construction.

• LTV Ratio: Lenders offer around 50%-75% of the property’s market value.

• Processing Time: Faster processing since the property is already owned.

Example:

The property worth₹1 crore owned by Prerna is her commercial property. She requires ₹50 lakhs for business expansion. For it, she has taken a Loan Against Property at an interest of 9.75% for 15 years. Now she has to pay an EMI of approximately ₹52,737 monthly.

Difference Between Home Loan and LAP

Interest Rate Comparison: Home Loan vs. LAP (Major Banks & NBFCs)

Making the Right Choice

The choice between a Home Loan and a LAP depends on your financial needs and goals.

Choose a Home Loan if:

• You are purchasing, constructing, or renovating a house.

• You want lower interest rates and longer tenure.

• You want to enjoy tax benefits on the loan amount.

Choose a Loan Against Property if:

• You need a large sum for business, education, medical, or personal use.

• You own a property and want to use it as collateral without selling it.

• You prefer a quicker approval process with flexible fund usage.

Conclusion

Loan Against Property is very beneficial in times of emergency; however, home loans are meant for long-term borrowers for lower interest rates, and tax benefits apply to these loans. Before deciding which one suits your purposes better, check the variation in interest rates, tax advantages, and other considerations along with your financial objectives and repayment capacity. The pre-purchase and purpose of that loan, reviewing the options, will surely create the accurate reflection of your financial objectives.

Are You Prepared to Submit an Application?

Compare lenders, assess your demands, and select the best loan offer. Thus you can guarantee your financial security free from needless stress.

FAQs 

Q: What are the basic eligibility requirements to be eligible for a home loan or LAP?

A: Both require stable income, good credit score, and property ownership (for LAP).

Q: Can I take a Loan Against Property without income proof?

A: Some lenders offer LAP based on property value but may charge higher interest rates.

Q: Is it possible to turn a loan secured by property into a home loan?

A: No, they are separate lending products with unique requirements and objectives.

Q: Which loan has lower EMI – Home Loan or LAP?

A: Home Loan has lower EMIs due to longer tenure and lower interest rates.

Q: Does LAP affect my home ownership?

A: No, but defaulting on payments can lead to property seizure by the lender.

Make a wise decision and secure your financial future with the right loan choice!

Home loans are provided in India by banks and housing finance companies with interest levels of 8.10% p.a. and above, with a period stretching to 30 years and up to 90% of the cost of the house as a loan. The choice of lender is significant, as many home loan schemes are available.

In this guide, a comprehensive comparison of home loans from the top 10 banks in India will list home loan interest rates, eligibility criteria, lending features, and unique benefits.

1. Top Banks for Home Loans in India (March 2025)

Note: Interest rates as of March 2025. Processing fees may vary.

2. Detailed Bank-Wise Analysis of Home Loans

A. SBI Home Loan

SBI is the largest home loan provider in India, offering special schemes for government employees, defense personnel, and NRIs.

B. HDFC Bank Home Loan

HDFC Bank provides tailor-made home loan solutions with special schemes for rural housing and self-employed individuals.

C. ICICI Bank Home Loan

ICICI Bank offers fast-track approvals and digital processing, along with pre-approved balance transfer facilities.

D. Axis Bank Home Loan

Axis Bank provides affordable housing loans with EMI waivers and overdraft features.

E. Kotak Mahindra Bank Home Loan

Kotak Mahindra Bank offers home loans with minimal documentation and special options for NRIs.

3. Key Features of Home Loans

4. Best Bank for Home Loans Based on Different Needs

Factors to Consider While Applying for a Home Loan

1. Total EMI Amount – EMIs consist of both principal and interest. Over time, the principal component increases while interest decreases.
2. Loan Tenure – Choose a loan tenure that matches your financial stability and income flow. Longer tenure reduces EMI but increases interest costs.
3. Interest Rate – The cost of borrowing depends on the principal amount and bank rates. Compare fixed and floating rates before applying.
4. Down Payment – A higher down payment (10-20%) reduces the loan amount and total interest burden. Some banks offer 100% financing but at higher costs.
5. Mortgage Insurance – Protects your family from loan repayment burden in case of an unforeseen event. Some banks make it mandatory.
6. Additional Fees – Includes processing fees, administrative charges, and service fees. Clarify these costs with the lender to manage your budget effectively.

5. Conclusion: Choosing the Right Home Loan Provider

Choosing the best bank for a home loan depends on interest rates, tenure, loan amount, processing fees, and special benefits.

For lowest interest rates: Union Bank of India & PNB

For high-value loans: Bank of Baroda

For digital loan processing: ICICI Bank & Axis Bank

For first-time home buyers: HDFC Bank & SBI

Before applying, compare home loan rates using an online home loan calculator to estimate EMIs, interest costs, and affordability.

You can take help of Refer Loan, a reputed Fintech firm with multiple lenders at one stop.

What is the difference between fixed and floating rates?

Fixed Rate – Interest remains constant.

Floating Rate – Varies with RBI policy changes.

Can I prepay my home loan?

Yes, partial or full prepayment is allowed. Floating-rate loans usually have no penalty.

Are home loans eligible for tax benefits?

Yes, under Section 80C (₹1.5 lakh on principal) and Section 24 (₹2 lakh on interest).

Who can be a co-applicant?

Spouse, parents, or major children.

What is Pre-EMI?

Interest paid until full loan disbursement.

Can I switch from a fixed to a floating rate?

Yes, but a conversion fee applies.

When does loan repayment start?

After full disbursement. Pre-EMI applies on partial disbursal.

Can I take two home loans at once?

Yes, if eligible. Tax benefits differ for the second home.

Can I get 100% home loan financing?

No, lenders finance only a portion of the property value.

Does a personal loan affect home loan eligibility?

Yes, ongoing loans impact your eligibility.

Can I buy a house with two loans?

No, taking two loans for the same property is fraudulent.

How do joint home loans work?

Co-applicants share ownership and loan responsibility.

In some situations, borrowers might be totally confused in making a decision. For important financing needs such as the purchase of a house or for higher education funding, there are two alternatives: home loan or LAP.

Both are secured but serve different purposes with unique pros and cons. This article will explore their differences, characteristics, benefits, and how to determine which option is best for your needs.

Home Loan vs. Loan Against Property: Key Differences

Bonus Insights 

• Risk of Property Seizure: Defaulting on LAP could lead to property loss. Home Loan default usually leads to restructuring before foreclosure.

• EMI Affordability: Home Loans offer smaller EMIs due to longer tenure, making repayment easier. LAP has a shorter tenure, leading to higher monthly EMIs.

• Ideal for Business Owners: If you’re a self-employed individual, LAP is a better option since it provides funds without end-use restrictions.

• Best for First-Time Home Buyers: A Home Loan is ideal for individuals looking to buy their first home and benefit from tax deductions.

Understanding Home Loan

A home loan aimed to aid individuals to purchase, construct, or rehabilitate a residence. The loan is secured by the property that is being constructed or acquired. This makes lenders consider it a safer loan. Such a condition allows longer repayment tenures and lower interest rates.

Example:

Ronit is going to purchase a new flat for ₹50 lakh. The Home Loan application has been approved for an amount of ₹40 lakh (80% of property value) at 8.5% interest rate for a tenure of 20 years. EMI will become approximately ₹ 34,587 each month.

Understanding Loan Against Property (LAP)

In the case of Loan Against Property, people put their existing properties to raise funds. These may be for their personal needs, business expansion, education, or health-related expenses. The loan amount is determined by the current market value of the property being pledged.

Key Features of LAP

• Purpose: Can be used for any legal financial need including business, education, medical expenses, or personal use.

• Loan Tenure: Typically ranges up to 15-20 years, shorter than home loans.

• Interest Rates: Higher than home loans, starting from 9.50% per annum.

• Tax Benefits: No tax benefits unless the loan is used for property purchase or construction.

• LTV Ratio: Lenders offer around 50%-75% of the property’s market value.

• Processing Time: Faster processing since the property is already owned.

Example:

The property worth₹1 crore owned by Prerna is her commercial property. She requires ₹50 lakhs for business expansion. For it, she has taken a Loan Against Property at an interest of 9.75% for 15 years. Now she has to pay an EMI of approximately ₹52,737 monthly.

Difference Between Home Loan and LAP

Interest Rate Comparison: Home Loan vs. LAP (Major Banks & NBFCs)

Making the Right Choice

The choice between a Home Loan and a LAP depends on your financial needs and goals.

Choose a Home Loan if:

• You are purchasing, constructing, or renovating a house.

• You want lower interest rates and longer tenure.

• You want to enjoy tax benefits on the loan amount.

Choose a Loan Against Property if:

• You need a large sum for business, education, medical, or personal use.

• You own a property and want to use it as collateral without selling it.

• You prefer a quicker approval process with flexible fund usage.

Conclusion

Loan Against Property is very beneficial in times of emergency; however, home loans are meant for long-term borrowers for lower interest rates, and tax benefits apply to these loans. Before deciding which one suits your purposes better, check the variation in interest rates, tax advantages, and other considerations along with your financial objectives and repayment capacity. The pre-purchase and purpose of that loan, reviewing the options, will surely create the accurate reflection of your financial objectives.

Are You Prepared to Submit an Application?

Compare lenders, assess your demands, and select the best loan offer. Thus you can guarantee your financial security free from needless stress.

FAQs 

Q: What are the basic eligibility requirements to be eligible for a home loan or LAP?

A: Both require stable income, good credit score, and property ownership (for LAP).

Q: Can I take a Loan Against Property without income proof?

A: Some lenders offer LAP based on property value but may charge higher interest rates.

Q: Is it possible to turn a loan secured by property into a home loan?

A: No, they are separate lending products with unique requirements and objectives.

Q: Which loan has lower EMI – Home Loan or LAP?

A: Home Loan has lower EMIs due to longer tenure and lower interest rates.

Q: Does LAP affect my home ownership?

A: No, but defaulting on payments can lead to property seizure by the lender.

Make a wise decision and secure your financial future with the right loan choice!

Home loans are provided in India by banks and housing finance companies with interest levels of 8.10% p.a. and above, with a period stretching to 30 years and up to 90% of the cost of the house as a loan. The choice of lender is significant, as many home loan schemes are available.

In this guide, a comprehensive comparison of home loans from the top 10 banks in India will list home loan interest rates, eligibility criteria, lending features, and unique benefits.

1. Top Banks for Home Loans in India (March 2025)

Note: Interest rates as of March 2025. Processing fees may vary.

2. Detailed Bank-Wise Analysis of Home Loans

A. SBI Home Loan

SBI is the largest home loan provider in India, offering special schemes for government employees, defense personnel, and NRIs.

B. HDFC Bank Home Loan

HDFC Bank provides tailor-made home loan solutions with special schemes for rural housing and self-employed individuals.

C. ICICI Bank Home Loan

ICICI Bank offers fast-track approvals and digital processing, along with pre-approved balance transfer facilities.

D. Axis Bank Home Loan

Axis Bank provides affordable housing loans with EMI waivers and overdraft features.

E. Kotak Mahindra Bank Home Loan

Kotak Mahindra Bank offers home loans with minimal documentation and special options for NRIs.

3. Key Features of Home Loans

4. Best Bank for Home Loans Based on Different Needs

Factors to Consider While Applying for a Home Loan

1. Total EMI Amount – EMIs consist of both principal and interest. Over time, the principal component increases while interest decreases.
2. Loan Tenure – Choose a loan tenure that matches your financial stability and income flow. Longer tenure reduces EMI but increases interest costs.
3. Interest Rate – The cost of borrowing depends on the principal amount and bank rates. Compare fixed and floating rates before applying.
4. Down Payment – A higher down payment (10-20%) reduces the loan amount and total interest burden. Some banks offer 100% financing but at higher costs.
5. Mortgage Insurance – Protects your family from loan repayment burden in case of an unforeseen event. Some banks make it mandatory.
6. Additional Fees – Includes processing fees, administrative charges, and service fees. Clarify these costs with the lender to manage your budget effectively.

5. Conclusion: Choosing the Right Home Loan Provider

Choosing the best bank for a home loan depends on interest rates, tenure, loan amount, processing fees, and special benefits.

For lowest interest rates: Union Bank of India & PNB

For high-value loans: Bank of Baroda

For digital loan processing: ICICI Bank & Axis Bank

For first-time home buyers: HDFC Bank & SBI

Before applying, compare home loan rates using an online home loan calculator to estimate EMIs, interest costs, and affordability.

You can take help of Refer Loan, a reputed Fintech firm with multiple lenders at one stop.

What is the difference between fixed and floating rates?

Fixed Rate – Interest remains constant.

Floating Rate – Varies with RBI policy changes.

Can I prepay my home loan?

Yes, partial or full prepayment is allowed. Floating-rate loans usually have no penalty.

Are home loans eligible for tax benefits?

Yes, under Section 80C (₹1.5 lakh on principal) and Section 24 (₹2 lakh on interest).

Who can be a co-applicant?

Spouse, parents, or major children.

What is Pre-EMI?

Interest paid until full loan disbursement.

Can I switch from a fixed to a floating rate?

Yes, but a conversion fee applies.

When does loan repayment start?

After full disbursement. Pre-EMI applies on partial disbursal.

Can I take two home loans at once?

Yes, if eligible. Tax benefits differ for the second home.

Can I get 100% home loan financing?

No, lenders finance only a portion of the property value.

Does a personal loan affect home loan eligibility?

Yes, ongoing loans impact your eligibility.

Can I buy a house with two loans?

No, taking two loans for the same property is fraudulent.

How do joint home loans work?

Co-applicants share ownership and loan responsibility.

In some situations, borrowers might be totally confused in making a decision. For important financing needs such as the purchase of a house or for higher education funding, there are two alternatives: home loan or LAP.

Both are secured but serve different purposes with unique pros and cons. This article will explore their differences, characteristics, benefits, and how to determine which option is best for your needs.

Home Loan vs. Loan Against Property: Key Differences

Bonus Insights 

• Risk of Property Seizure: Defaulting on LAP could lead to property loss. Home Loan default usually leads to restructuring before foreclosure.

• EMI Affordability: Home Loans offer smaller EMIs due to longer tenure, making repayment easier. LAP has a shorter tenure, leading to higher monthly EMIs.

• Ideal for Business Owners: If you’re a self-employed individual, LAP is a better option since it provides funds without end-use restrictions.

• Best for First-Time Home Buyers: A Home Loan is ideal for individuals looking to buy their first home and benefit from tax deductions.

Understanding Home Loan

A home loan aimed to aid individuals to purchase, construct, or rehabilitate a residence. The loan is secured by the property that is being constructed or acquired. This makes lenders consider it a safer loan. Such a condition allows longer repayment tenures and lower interest rates.

Example:

Ronit is going to purchase a new flat for ₹50 lakh. The Home Loan application has been approved for an amount of ₹40 lakh (80% of property value) at 8.5% interest rate for a tenure of 20 years. EMI will become approximately ₹ 34,587 each month.

Understanding Loan Against Property (LAP)

In the case of Loan Against Property, people put their existing properties to raise funds. These may be for their personal needs, business expansion, education, or health-related expenses. The loan amount is determined by the current market value of the property being pledged.

Key Features of LAP

• Purpose: Can be used for any legal financial need including business, education, medical expenses, or personal use.

• Loan Tenure: Typically ranges up to 15-20 years, shorter than home loans.

• Interest Rates: Higher than home loans, starting from 9.50% per annum.

• Tax Benefits: No tax benefits unless the loan is used for property purchase or construction.

• LTV Ratio: Lenders offer around 50%-75% of the property’s market value.

• Processing Time: Faster processing since the property is already owned.

Example:

The property worth₹1 crore owned by Prerna is her commercial property. She requires ₹50 lakhs for business expansion. For it, she has taken a Loan Against Property at an interest of 9.75% for 15 years. Now she has to pay an EMI of approximately ₹52,737 monthly.

Difference Between Home Loan and LAP

Interest Rate Comparison: Home Loan vs. LAP (Major Banks & NBFCs)

Making the Right Choice

The choice between a Home Loan and a LAP depends on your financial needs and goals.

Choose a Home Loan if:

• You are purchasing, constructing, or renovating a house.

• You want lower interest rates and longer tenure.

• You want to enjoy tax benefits on the loan amount.

Choose a Loan Against Property if:

• You need a large sum for business, education, medical, or personal use.

• You own a property and want to use it as collateral without selling it.

• You prefer a quicker approval process with flexible fund usage.

Conclusion

Loan Against Property is very beneficial in times of emergency; however, home loans are meant for long-term borrowers for lower interest rates, and tax benefits apply to these loans. Before deciding which one suits your purposes better, check the variation in interest rates, tax advantages, and other considerations along with your financial objectives and repayment capacity. The pre-purchase and purpose of that loan, reviewing the options, will surely create the accurate reflection of your financial objectives.

Are You Prepared to Submit an Application?

Compare lenders, assess your demands, and select the best loan offer. Thus you can guarantee your financial security free from needless stress.

FAQs 

Q: What are the basic eligibility requirements to be eligible for a home loan or LAP?

A: Both require stable income, good credit score, and property ownership (for LAP).

Q: Can I take a Loan Against Property without income proof?

A: Some lenders offer LAP based on property value but may charge higher interest rates.

Q: Is it possible to turn a loan secured by property into a home loan?

A: No, they are separate lending products with unique requirements and objectives.

Q: Which loan has lower EMI – Home Loan or LAP?

A: Home Loan has lower EMIs due to longer tenure and lower interest rates.

Q: Does LAP affect my home ownership?

A: No, but defaulting on payments can lead to property seizure by the lender.

Make a wise decision and secure your financial future with the right loan choice!

Home loans are provided in India by banks and housing finance companies with interest levels of 8.10% p.a. and above, with a period stretching to 30 years and up to 90% of the cost of the house as a loan. The choice of lender is significant, as many home loan schemes are available.

In this guide, a comprehensive comparison of home loans from the top 10 banks in India will list home loan interest rates, eligibility criteria, lending features, and unique benefits.

1. Top Banks for Home Loans in India (March 2025)

Note: Interest rates as of March 2025. Processing fees may vary.

2. Detailed Bank-Wise Analysis of Home Loans

A. SBI Home Loan

SBI is the largest home loan provider in India, offering special schemes for government employees, defense personnel, and NRIs.

B. HDFC Bank Home Loan

HDFC Bank provides tailor-made home loan solutions with special schemes for rural housing and self-employed individuals.

C. ICICI Bank Home Loan

ICICI Bank offers fast-track approvals and digital processing, along with pre-approved balance transfer facilities.

D. Axis Bank Home Loan

Axis Bank provides affordable housing loans with EMI waivers and overdraft features.

E. Kotak Mahindra Bank Home Loan

Kotak Mahindra Bank offers home loans with minimal documentation and special options for NRIs.

3. Key Features of Home Loans

4. Best Bank for Home Loans Based on Different Needs

Factors to Consider While Applying for a Home Loan

1. Total EMI Amount – EMIs consist of both principal and interest. Over time, the principal component increases while interest decreases.
2. Loan Tenure – Choose a loan tenure that matches your financial stability and income flow. Longer tenure reduces EMI but increases interest costs.
3. Interest Rate – The cost of borrowing depends on the principal amount and bank rates. Compare fixed and floating rates before applying.
4. Down Payment – A higher down payment (10-20%) reduces the loan amount and total interest burden. Some banks offer 100% financing but at higher costs.
5. Mortgage Insurance – Protects your family from loan repayment burden in case of an unforeseen event. Some banks make it mandatory.
6. Additional Fees – Includes processing fees, administrative charges, and service fees. Clarify these costs with the lender to manage your budget effectively.

5. Conclusion: Choosing the Right Home Loan Provider

Choosing the best bank for a home loan depends on interest rates, tenure, loan amount, processing fees, and special benefits.

For lowest interest rates: Union Bank of India & PNB

For high-value loans: Bank of Baroda

For digital loan processing: ICICI Bank & Axis Bank

For first-time home buyers: HDFC Bank & SBI

Before applying, compare home loan rates using an online home loan calculator to estimate EMIs, interest costs, and affordability.

You can take help of Refer Loan, a reputed Fintech firm with multiple lenders at one stop.

What is the difference between fixed and floating rates?

Fixed Rate – Interest remains constant.

Floating Rate – Varies with RBI policy changes.

Can I prepay my home loan?

Yes, partial or full prepayment is allowed. Floating-rate loans usually have no penalty.

Are home loans eligible for tax benefits?

Yes, under Section 80C (₹1.5 lakh on principal) and Section 24 (₹2 lakh on interest).

Who can be a co-applicant?

Spouse, parents, or major children.

What is Pre-EMI?

Interest paid until full loan disbursement.

Can I switch from a fixed to a floating rate?

Yes, but a conversion fee applies.

When does loan repayment start?

After full disbursement. Pre-EMI applies on partial disbursal.

Can I take two home loans at once?

Yes, if eligible. Tax benefits differ for the second home.

Can I get 100% home loan financing?

No, lenders finance only a portion of the property value.

Does a personal loan affect home loan eligibility?

Yes, ongoing loans impact your eligibility.

Can I buy a house with two loans?

No, taking two loans for the same property is fraudulent.

How do joint home loans work?

Co-applicants share ownership and loan responsibility.

In some situations, borrowers might be totally confused in making a decision. For important financing needs such as the purchase of a house or for higher education funding, there are two alternatives: home loan or LAP.

Both are secured but serve different purposes with unique pros and cons. This article will explore their differences, characteristics, benefits, and how to determine which option is best for your needs.

Home Loan vs. Loan Against Property: Key Differences

Bonus Insights 

• Risk of Property Seizure: Defaulting on LAP could lead to property loss. Home Loan default usually leads to restructuring before foreclosure.

• EMI Affordability: Home Loans offer smaller EMIs due to longer tenure, making repayment easier. LAP has a shorter tenure, leading to higher monthly EMIs.

• Ideal for Business Owners: If you’re a self-employed individual, LAP is a better option since it provides funds without end-use restrictions.

• Best for First-Time Home Buyers: A Home Loan is ideal for individuals looking to buy their first home and benefit from tax deductions.

Understanding Home Loan

A home loan aimed to aid individuals to purchase, construct, or rehabilitate a residence. The loan is secured by the property that is being constructed or acquired. This makes lenders consider it a safer loan. Such a condition allows longer repayment tenures and lower interest rates.

Example:

Ronit is going to purchase a new flat for ₹50 lakh. The Home Loan application has been approved for an amount of ₹40 lakh (80% of property value) at 8.5% interest rate for a tenure of 20 years. EMI will become approximately ₹ 34,587 each month.

Understanding Loan Against Property (LAP)

In the case of Loan Against Property, people put their existing properties to raise funds. These may be for their personal needs, business expansion, education, or health-related expenses. The loan amount is determined by the current market value of the property being pledged.

Key Features of LAP

• Purpose: Can be used for any legal financial need including business, education, medical expenses, or personal use.

• Loan Tenure: Typically ranges up to 15-20 years, shorter than home loans.

• Interest Rates: Higher than home loans, starting from 9.50% per annum.

• Tax Benefits: No tax benefits unless the loan is used for property purchase or construction.

• LTV Ratio: Lenders offer around 50%-75% of the property’s market value.

• Processing Time: Faster processing since the property is already owned.

Example:

The property worth₹1 crore owned by Prerna is her commercial property. She requires ₹50 lakhs for business expansion. For it, she has taken a Loan Against Property at an interest of 9.75% for 15 years. Now she has to pay an EMI of approximately ₹52,737 monthly.

Difference Between Home Loan and LAP