Both are secured against immovable property. The interest rates look similar at a glance. But the use-case, tax treatment and loan-to-value can make a difference of lakhs over a 15-year tenure. Here's how to decide.
The one-line rule
If you're buying or building the property, take a home loan. If you already own it and need cash for any purpose, take a LAP. Mixing this up costs you money.
Interest rates
- Home loan: 8.35% – 10.50% p.a. (subsidised because of housing finance regulations).
- LAP: 9.00% – 13.50% p.a. (slightly higher — funds are unrestricted).
Loan-to-value
- Home loan: Up to 90% of property cost.
- LAP: Up to 70% of property's market value.
Tenure
- Home loan: Up to 30 years.
- LAP: Up to 15 years.
Tax benefits
- Home loan: Section 24(b) up to ₹2L on interest, Section 80C up to ₹1.5L on principal.
- LAP: Tax benefit only if funds are used for business or for purchasing another house — none for personal use.
Best for…
LAP is ideal for business expansion, child's education abroad, debt consolidation or any large lump-sum need where you don't want to liquidate the property. Home loan is unmatched for first-time buyers and self-construction.