Should You Apply For A Loan Against Property Or A Personal Loan?

In today’s competitive world, we all need money for everything from funding our own business to paying for the education of our children. One of the first thoughts to come to mind is, “where do we get this money from?” Can you look out to a loan again property or a personal loan? Let’s try to understand both these types of loan.

Nevertheless, there are many ways in which we can source money but from all of them, the easiest way is to opt for a loan. One such loan is available to an individual is the “loan against property” and another is “personal loan”. Let’s understand the meaning of these 2 types of loans and their pros and cons.


A ‘loan against property’ in simple language is a loan which you can avail against the mortgage of property. The property which is being mortgaged by one can be any property. The property can be both in the form of a flat or in the form of a piece of land. The loan amount sanction is a security amount against the property on mortgage and as a result, one is able to get a higher loan amount.

  1. An individual takes the loan by mortgaging the house property.
  2. Since the rate of interest is lower, often EMI turn out cheaper.
  3. Determination of value of maximum loan eligibility is by the value of the property and income.
  4. Maximum loan tenure for LAP is up to 15 years (180 months)
  5. Security of loan


A personal loan is a loan often extended by a bank or financial institutions to meet the financial need such as medical expenses, wedding, and house repairs or maybe debt consolidation. Here you don’t need to mortgage asset as a security, it usually extended on the basis of a person’s credit history and the borrower is expected to repay the loan from personal income. An individual can take a personal loan for personal use without any security, mortgage or guarantor. As a result of this, the amount sanctioned is comparatively lower. These loans are very common among salaried borrowers.

  1. Since the rate of interest is high, EMIs for personal loans are high.
  2. Determination of maximum loan eligibility is mainly by an individual’s income.
  3. Maximum loan tenure for a personal loan is up to 5 years (60 months)
  4. Loan security is negligible.

The decision to opt for a personal loan or a loan against a property is a personal or depends on factors such as availability and ease of obtaining credit. There are a number of similarities and important differences between the two loans that you must be aware of before opting for either.