| Purpose |
Used for various personal needs like travel, medical emergencies, weddings, etc. |
Specifically used for buying, constructing, or renovating a house or property. |
| Type of Loan |
Unsecured loan – no collateral required. |
Secured loan – property is mortgaged as collateral. |
| Loan Amount |
Typically lower, ranging from ₹50,000 to ₹25 lakhs. |
Higher amounts, based on property value; can go up to several crores. |
| Interest Rates |
Higher, usually between 10% to 24% per annum. |
Lower, generally between 7% to 10% per annum. |
| Repayment Tenure |
Shorter tenure, usually 1 to 5 years. |
Longer tenure, up to 30 years. |
| Collateral Required |
No |
Yes, the property being purchased or built is used as collateral. |
| Eligibility Criteria |
Based on income, credit score, and employment status. |
Based on income, credit score, property value, and employment status. |
| Processing Time |
Quick approval and disbursement (1–3 days typically). |
Longer processing due to legal checks and property valuation. |
| Tax Benefits |
No tax benefits. |
Eligible for tax deductions under Sections 24(b) and 80C of the Income Tax Act. |
| Usage Restrictions |
No restrictions; can be used for any personal purpose. |
Can only be used for housing-related expenses. |
| Risk to Borrower |
No risk of asset loss due to absence of collateral. |
Risk of property loss if EMIs are not paid. |
| Documentation |
Minimal – ID, income proof, and bank statements. |
More extensive – includes property documents, builder agreements, etc. |
| Prepayment Charges |
May apply if the loan is taken at a fixed interest rate. |
Usually no prepayment charges for floating rate loans. |
| Approval Based On |
Creditworthiness and monthly income. |
Creditworthiness, income, and property evaluation. |
| Disbursement |
Lump sum disbursal directly to borrower. |
Usually disbursed in stages based on construction progress. |
| Interest Type |
Mostly fixed interest. |
Can be fixed or floating interest. |
| Loan to Value (LTV) |
Not applicable or very limited ratio based on salary. |
Generally up to 75%–90% of property value. |
| End Use Monitoring |
Not monitored. |
Strictly monitored to ensure funds are used for housing. |
| Example Use Case |
Funding a destination wedding or urgent hospital expenses. |
Purchasing a 2BHK apartment or constructing a house on owned land. |
Personal Loan vs Home Loan