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Can Loan Against Property be Converted to Home Loan?

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0 2024-10-08T08:49:45+00:00
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Let me answer your query about can loan against property be converted to home loan. A Loan Against Property (LAP) cannot be directly converted into a home loan. It is because they are fundamentally different loan products serving distinct purposes. Read on to know more.

Can a Loan Against Property Be Converted to a Home Loan?

No. A LAP is a secured loan where your property is used as collateral, and the funds can be utilized for various personal or business needs. On the other hand, a home loan is specifically meant for purchasing or constructing a residential property.

However, there are some indirect ways to transition from a LAP to a Home Loan-like structure:

  • One option is to repay your Loan Against Property and then apply for a new Home Loan. If you plan to use the property as your primary residence or to buy a new home, you can take a Home Loan after closing the LAP. This way, you can benefit from the lower interest rates typically offered on Home Loans.

  • Another possible route is a balance transfer. While this option does not exactly convert your LAP to a Home Loan, you can transfer your LAP to another lender offering more favorable terms.

  • Some lenders might provide competitive rates on LAPs, which may bring them closer to Home Loan rates. 

If the purpose of your LAP changes, such as purchasing a property, you could refinance by taking a new home loan and using that to settle the existing LAP. This option is more complex and would require approval from the lender. I hope you found this helpful.

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Akanksha Shukla (law graduate)

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