If you want money to meet needs like your child's higher education, or funding your business or even your child's wedding, you could go for either a personal loan or a Loan against property (LAP). However, you need to consider both the options carefully and be aware of the differences between the two so as to choose a better suited option for yourself.
Loan against property (LAP)
As the name suggests, loan against property is a loan disbursed against mortgage of property. The amount of loan disbursed usually ranges within 40-60 percent of the market value of the property. LAP is a secured loan where the borrower guarantees the repayment by keeping his property as a security with the lender. You can obtain this loan against either your self-occupied property or property lent out on rent.
A loan against property can serve purposes like expanding business, sending your son/daughter abroad for higher education, getting your son/daughter married, funding your medical treatments and even your vacation.
For availing a loan against property you need to fulfill certain eligibility criteria that vary across different banks. Banks usually consider factors like your income, savings, debt obligations, the value of the property held as a security and your repayment history of all other loans, credit cards etc.