Key differences
| Point | Home loan | Loan against property |
|---|---|---|
| Purpose | Buying, building or renovating a home | Business, education, medical or other needs |
| Security | The property being bought | A property you already own |
| Typical tenure | Up to 20–30 years | Shorter, often up to 15 years |
| Interest rate | Usually lower | Usually higher |
| Loan amount | Share of property value being bought | Share of market value of owned property |
| Tax benefit | On interest and principal, within limits | Depends on end use |
Tax benefits on a home loan
- Interest on a self-occupied house: deduction up to ₹2 lakh a year under the old regime
- Principal repayment: within the 80C limit under the old regime
- Interest on a let-out house: deductible against rental income, with loss set-off limits
- Pre-construction interest: claimed in five equal parts after possession
- Joint loans: each co-owner and co-borrower can claim within their own limits
Tax treatment of LAP
LAP interest is not deductible by default. If the money is used for business, interest may be claimed as a business expense with documentation. If it is used to buy or build another house, home loan deductions may apply. Keep records of how the funds were used.
Which one fits your need
- Buying a flat in Greater Noida West: home loan
- Funding business expansion with an owned house: LAP
- Renovating your own home: home loan or top-up, usually cheaper than LAP
- Consolidating costly debt with an owned property: LAP, after comparing total cost
Under the new regime, deductions for interest on a self-occupied home are not available. Compare regimes before deciding how to structure a loan.
Frequently asked questions
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Sources
Information is for general guidance and not a substitute for professional advice. Rules, rates and due dates change; confirm with us before acting.