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
- 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
🏦 Example:
- Property value: ₹1 crore
- Loan you may get: ₹50–70 lakh
📌 Key Features
- 🏠 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)
⚖️ Is It Different from a Reverse Mortgage?
Yes — they are completely different.
🔁 Reverse Mortgage (for senior citizens)
A reverse mortgage is the opposite of a loan against property.
📊 How it works:
- 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 vs Reverse Mortgage
Feature
Home Equity Loan (LAP)
Reverse Mortgage
Who gets money
You borrow from bank
Bank pays you
Repayment
Monthly EMI required
No EMI
Age limit
Any adult with property
Senior citizens only
Purpose
Any use
Retirement income
Ownership
You keep ownership
You keep living rights
🧠 Simple Explanation
- 🏠 Home equity loan = “I own a house → I borrow money using it”
- 🔁 Reverse mortgage = “I own a house → bank pays me monthly”
⚠️ Important Points
For home Equity Loan:
- Default can lead to property auction
- Interest rates are higher than home loans
- Requires good credit score
For Reverse Mortgage:
- Not very popular in india yet
- Mostly used by retirees needing income
🧾 Final Takeaway
👉 In india, “home equity loan” usually means Loan Against Property (LAP)
👉 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.
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