🏠 What is a Home Equity Loan in India?
In india, what people commonly call a “home equity loan” is officially known as a Loan Against Property (LAP).👉 It is a loan where you mortgage your owned property (house, flat, or land) and borrow money from a bank based on its value.💰 How a home Equity Loan (LAP) Works
👉 It is very different from a reverse mortgage, which is an income scheme for senior citizens✔ One is borrowing money using your house
✔ The other is earning money from your house Disclaimer:The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.
- You own a property
- Bank evaluates its market value
- You can borrow around 50%–70% of that value
- You repay it in EMIs with interest
- Property value: ₹1 crore
- Loan you may get: ₹50–70 lakh
- 🏠 Property remains yours, but is mortgaged
- 💸 Can be used for any purpose (business, education, medical, etc.)
- 📉 Lower interest than personal loans
- ⏳ Long repayment tenure (up to 15–20 years)
- Available only for senior citizens (usually 60+)
- You give your house to the bank as security
- Bank pays you monthly income
- You don’t repay EMIs
- Loan is settled when you move out or after death (property is sold)
- 🏠 Home equity loan = “I own a house → I borrow money using it”
- 🔁 Reverse mortgage = “I own a house → bank pays me monthly”
- Default can lead to property auction
- Interest rates are higher than home loans
- Requires good credit score
- Not very popular in india yet
- Mostly used by retirees needing income
👉 It is very different from a reverse mortgage, which is an income scheme for senior citizens✔ One is borrowing money using your house
✔ The other is earning money from your house Disclaimer:The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.