Loan against property is a type of mortgage loan which allows individuals to provide their own property as security when applying for a loan. A personal loan is a type of loan which financial institutions offer their customers with no requirement of security. The difference between a personal loan and a loan against property are:
* In the case of loan against property, the individual is required to provide their property as security. This is required as it ensures that the applicant repays the loan on time.
* A personal loan requires no security to be provided on the applicant's behalf.
* Providing their own property allows the individual to get a lower interest rate on their loan.
* An individual applying for a personal loan will be charged a higher interest rate as no security has been provided.
The loan against property interest rates is comparatively lower than that of a personal loan for any applicant. The reason why the interest on personal loans is higher is the fact that there is no security provided. Hence for the financial institution, such a loan is risky. On the other hand, a loan against property provides lower risk for the financial institution due to the security. Even this mortgage loan's interest rates are lower, if the borrower fails to repay the loan, the security provided can be sold to recover the loan amount.
Opting for a loan against property is ideal for individuals looking for an affordable source of finance. This type of a loan can be used to help fund a new business venture, a child's education abroad, a marriage or even an international vacation. The loan against property interest rate also makes this type of loan an ideal choice. Its affordability ensures that any individual can afford such a loan. Most loans offered by financial institutions tend to be expensive for individuals. Also the process of getting one's application for a loan approved takes time. In the case of loan against property however, one simply has to send in their application along with details about their property. Since this type of a loan provides a lower risk for the financial institution, the approval is quicker. Hence the financial institution is willing to provide affordable mortgage loan interest rates to the borrowers.
Instead of applying for a personal loan which is far more expensive, one must simply opt for a loan against property which is a far more affordable option.