When you need extra funds, choosing the right loan is important. A personal loan is quick and simple, making it ideal for immediate expenses like medical bills or sudden travel plans. If you own property, however, a loan against property might be a better option. It usually offers larger amounts and lower interest rates, making it suitable for bigger investments or debt consolidation.
In this blog, we’ll explain what a Loan Against Property is, compare it with an education loan, and show you why it might be worth considering.
Loan Against Property vs. Personal Loan
When you need money, two common choices are Personal Loans and Loans Against Property. Let’s compare them to see which might suit you better.
| Aspect | Personal Loan | Loan Against Property |
|---|---|---|
| Security Required | No collateral needed | Requires collateral like residential or commercial property. |
| Interest Rate | Higher, usually 10.25% to 26% per annum. | Lower, typically 7% to 14% per annum. |
| Loan Amount | Based on income and credit score, up to ₹20 lakhs. | Up to 60% of the property value, often reaching crores. |
| Repayment Tenor | Shorter, usually up to 5 years. | Longer, up to 15-20 years. |
| Processing Time | Quick, from a few minutes to a week. | Slower, usually 1 to 3 weeks due to property evaluation. |
| Use of Loan | Suitable for personal expenses like medical bills or weddings. | Ideal for larger needs like business expansion or renovations. |
| Risk of Default | Impacts credit score; no risk to specific assets. | Property used as collateral can be seized if you default. |
| Prepayment Charges | May have charges, especially for fixed-rate loans. | Lower charges, often waived for floating-rate loans. |
Also Read: Why Choose a Loan Against Property Over a Business Loan?
Top 5 Advantages of Choosing a Loan Against Property Over a Personal Loan
Choosing the right loan can make a big difference in how you manage your finances. Here are five clear reasons why a Loan Against Property often turns out to be a better choice than a Personal Loan.
Lower Interest Rates
Loan Against Property offers lower interest rates due to the security of collateral, reducing borrowing costs and monthly payments.
Larger Loan Amounts
Borrow higher amounts based on your property’s market value, suitable for major expenses like education or medical bills.
Longer Repayment Period
Enjoy repayment terms of up to 15-20 years, reducing monthly EMIs and easing financial strain.
Tax Benefits
Get tax deductions on interest payments if the loan is used for specific purposes like property purchase or renovation.
Flexibility in Usage
Use the funds for personal or professional needs without restrictions, offering versatility in financial planning.
Always think carefully about your ability to repay before choosing a loan. Loans Against Property can offer more advantages, but they also come with the risk of losing your property if you cannot repay the loan.
Also Read: Why should you consider Loan against property?
Compare Loan Against Property Interest Rates – 2025
| Banks/ NBFCs | Rate of Interest | Maximum Loan Amount |
|---|---|---|
| SBI | 10.60% p.a. – 11.30% p.a. | Rs. 7.5 Crore |
| HDFC | 9.50% p.a. – 11.00% p.a. | 65% of the market value of the property |
| IDFC | 9.25% p.a. onwards | 50% – 70% of the market value of the property |
| Tata Capital | 14.25% p.a. onwards | Depending on the market value of the property |
| Axis Bank | 10.50% p.a. – 10.90% p.a. | Rs. 5 Crore |
| Kotak Mahindra Bank | 9.50% p.a. onwards | Rs. 5 Crore |
| Bank of India | 10.10% p.a. Per lakh | Rs. 5 Crore |
| LIC Housing Finance | 9.70% p.a. – 11.55% p.a. | Rs. 2 lakhs onwards |
| PNB Housing Finance | 9.24% p.a. – 12.75% p.a. | 70% of the market value of the property |
| ICICI Bank | 10.85% p.a. – 12.50% p.a. | 75% of the market value of the property |
How Can Credit Dharma Simplify Your Loan Choices?
Deciding between a personal loan and a loan against property can be tough. This may require substantial funding, but we make it easy. At Credit Dharma, we make this possible by offering lowest guaranteed Loan Against Property interest rates that keep your monthly payments manageable, allowing you to enjoy more of what truly matters.
But that is not it. We offer:
- Guaranteed up to 100% funding
- Receive lifetime assistance and expert guidance long after your loan is approved.
- Enjoy a fully digital process with minimal paperwork
- Get your loan approved within just 1-2 weeks.
Frequently Asked Questions
A personal loan is money you borrow from a bank or lender that you can use for any purpose without needing to give any security.
A loan against property is a loan where you use your property as security to borrow money, often allowing you to borrow more at lower rates.
Loan against property usually has lower interest rates because it’s secured by your property.
Yes, personal loans can be processed and disbursed quickly, often within a few days, because they do not require property evaluation.
You can usually borrow up to 60-70% of your property’s value with a loan against property.
A loan against property is better for larger amounts because it’s based on the value of your property.
If you can’t pay back a personal loan, it could hurt your credit score and lead to legal action but you won’t lose any specific asset.
If you fail to repay a loan against property, the lender can take control of the property used as collateral.
HDFC Home Loan
SBI Home Loan
