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December 1, 2025
A personal loan and a loan against property are popular financial options provided by banks and NBFCs. Applicants seeking financial help can choose either option based on the purpose of the funds and eligibility requirements.
To help our customers choose the best loan for their circumstances, we aim to provide essential details and comparisons. Significant features include the following:
A personal loan is unsecured and does not require collateral. Applicants receive loan amounts based on their profile points, which include net salary, CIBIL score, and the employer’s category as per the approved company category list of HDFC Bank.
A Loan Against Property, as the name suggests, is a loan secured by a mortgage over the customer’s property. Loan amounts are determined by the property’s value and the required ownership documents.
The loan amounts issued as personal loans range from ₹ 1 Lakh to ₹ 40 Lakh, depending on the Bank’s policy. An applicant is issued a personal loan based on the lender’s eligibility criteria.
Banks such as HDFC and ICICI Bank issue Loan Against Property (LAP) loans for amounts based on the property’s value. The applicant’s income must also be sufficient to afford EMI repayments.
The repayment tenure allotted for a personal loan is from 12 to 72 months, depending on the EMI payable by the customer. Factors influencing the tenure allotted include the applicant’s income, current obligations, and the approved loan amount.
Loan Against Property can be repaid over a tenure of up to 15 years, depending on the loan amount and the applicant’s income. The longer tenure makes for an easier EMI but an increased cost.
The interest rate for a Personal Loan range from 9.99% at a monthly reducing balance to 15%. Banks and NBFCs pay interest in accordance with their individual policies and the cost of funds. Higher loan amounts are disbursed at a lower interest rate and vice versa.
Banks offer a Loan Against Property at lower interest rates because it is a secured loan, starting at 8.5% with a floating interest rate. The interest rates offered by Banks and NBFCs will vary based on property details and loan amount.
The interest rate for a personal loan is determined at the time of disbursement, and the EMI remains the same throughout the tenure. The terms of the personal loan remain fixed as per the agreement signed.
A LAP is issued at a floating interest rate that fluctuates in line with the RBI (Reserve Bank of India) Repo Rate. The terms of a LAP thus vary as per the policy of the lender, a Government Bank, Private Bank or NBFC.
For a Personal Loan, the CIBIL score and the applicant’s history are essential due to the unsecured nature of the funding. Lenders check the CIBIL score and history before processing. A score of 720 points and above is the acceptable benchmark.
A mortgage secures funds granted under a Loan against property, so applicants with a lower CIBIL score can obtain the funds they need. However, applicants with a CIBIL issue may be charged a higher interest rate.
A personal loan provides quick funding; most Banks offer an online process with funds transferred to the Bank account within 72 hours. An existing relationship, such as a Top Up or parallel personal loan, will accelerate the process.
The processing time for a Loan against Property increases due to the legal assessment, property verification, and documentation. Banks will take 10 to 15 days to process a loan against property.
A personal loan is processed under the primary applicant’s details; a co-applicant is not mandatory. A co-applicant, such as a blood relative or spouse, can be added to increase eligibility for the loan amount.
A Loan Against Property involves all the owners of the property being part of the loan; if the property is in the name of a single owner, a co-applicant is mandatory. The primary applicant is the financial applicant who will pay the EMI.
The similarities between a Personal loan and a Loan against property include the flexibility in how the funds can be used. Customers are free to utilise the amount received for personal and professional purposes.
Both a Personal loan and a Loan against Property can be repaid conveniently through EMI (equated monthly instalments) at a lower monthly interest rate. Given the individual differences and benefits, let us consider the inputs that are deciding factors for both products.
A personal loan offers quick funding: A personal loan from HDFC Bank or ICICI Bank is processed online, and the amount approved is transferred to the account electronically. The documents required are simple and can be downloaded digitally. Thus, if funds are needed in a hurry or for an emergency, a personal loan is the quickest solution to fulfil the requirement.
If you need a smaller loan amount, a personal loan is available without any collateral, based solely on the customer’s net income, CIBIL score, credit history, and the employer’s category in the bank’s approved company list. Banks and NBFCs offer personal loans starting from ₹1 lakh. Therefore, if the required loan amount is not too high, a personal loan that is easily accessible and can be repaid within a limited tenure will be suitable.
Convenient Documentation: Valid KYC documents, such as your Aadhaar card, and Income documents, including a salary slip and Bank statement, are required to apply for a personal loan of up to ₹ 40 lakhs. Suppose the property held by the customer is unregistered or the appropriate documents are unavailable. In that case, loan seekers prefer to apply for a personal loan that the available documents can readily support.
For Significant Loan Amounts: Banks and NBFCs offer LAPs at reasonable interest rates of 8.45% or higher for extended tenures of up to 15 years. Thus, if increased loan amounts are required, Banks will approve up to 60% of the property value as a LAP. With an extended tenure, the applicant is eligible to obtain a loan amount up to six figures, depending on the property’s value and the customer’s income.
For an affordable EMI, the tenure for a loan against property is determined by the applicant’s age and the approved loan amount. Applicants looking for an EMI that suits their budget can apply for a longer tenure, enabling the loan to be comfortably repaid without delay or default. In case of excess funds, customers can make a partial payment towards the principal and foreclose the loan without any charges.
For Debt Consolidation: If you cannot pay your credit card bills on time, the accumulating dues will accrue a higher interest rate of 36% to 40% per year. If you cannot settle your credit dues, have multiple loans, or are making numerous instalment payments, you are likely using revolving credit, which can lead to a debt trap.
Take a reality check on your debt levels and assess whether you can comfortably repay them without defaults. Notice these signs early and consider applying for a Loan Against your property, which offers funds at a reduced interest rate. This can help consolidate your outstanding debts into a single payment. With a Loan Against your property, you can pay off your debts with manageable EMIs and improve your CIBIL score.
