LAS vs. Loan Against Property: Which One Works Best for You?

When you need quick funds, asset-backed loans like Loan Against Securities (LAS) or Loan Against Property (LAP) are practical options. Both help you access funds without selling your valuable assets, but they serve different purposes. Many Indian investors find it challenging to choose between LAS and LAP.

In this article, you'll learn exactly how LAS differs from LAP, the benefits each offers, and how to decide the best fit for your specific needs.

What makes LAS and LAP different?

Understanding the key differences between LAS and LAP will help you choose wisely based on your financial situation and urgency.

What is Loan Against Securities (LAS)?

Loan Against Securities (LAS) lets you borrow against financial assets like mutual funds, shares, or fixed deposits (FDs). For example, if you own mutual funds worth ₹5 lakhs, you can typically borrow up to ₹3 lakhs, depending on the asset's type and market value. LAS ensures your investments remain intact, continuing to earn returns.

What is Loan Against Property (LAP)?

Loan Against Property (LAP) is when you borrow money against residential or commercial real estate. For instance, if you own a property worth ₹50 lakhs, you might qualify for a loan of about ₹30 lakhs. LAP is generally preferred for larger financial needs like funding education, business expansion, or significant home renovations.

How are they secured differently?

LAS: Backed by easily tradable securities like mutual funds or shares, offering higher liquidity. You retain ownership and continue to earn from your assets.

LAP: Secured against real estate property, which is less liquid. Property ownership remains with you but is legally pledged until loan repayment.

How fast can I get funds?

Speed of fund disbursal varies significantly:

LAS: Digital approval within minutes; funds can reach your account within a few hours.

LAP: Longer processing times, typically several days or weeks due to valuation and legal checks involved.

Which one offers better benefits?

Explore the comparative benefits to identify which type of loan aligns best with your financial goals.

Which has lower interest rates?

LAS: Typically ranges from 9% to 12% per annum, influenced by asset type and market volatility.

LAP: Usually between 8.5% to 11%, dependent on property valuation and borrower profile.

Which one is more flexible?

LAS: Offers a flexible credit line where you pay interest only on the amount you withdraw.

LAP: Comes with structured EMIs for a defined tenure, making it less flexible but predictable.

What are the tax implications?

LAS: No specific tax benefits. Interest payments are not tax-deductible.

LAP: Interest paid can be claimed as a deduction if the funds are used for business purposes or acquiring property.

Can I stay invested while borrowing?

With LAS, your securities continue earning market returns even while pledged as collateral, unlike LAP where real estate does not generate liquid returns during loan tenure.

Which should you choose based on your situation?

Identify your priorities clearly to choose the best-fit solution between LAS and LAP.

Do you need quick emergency funds?

Opt for LAS for its swift digital processing and rapid disbursement.

Do you own property but not securities?

If your primary asset is real estate, LAP becomes a logical choice.

Is your loan for a long-term need?

LAP suits long-term financial requirements, like education expenses or home renovations, due to its structured repayment.

Want to preserve investment growth?

LAS is ideal if you want to maintain investment growth potential, leveraging securities without liquidating them.

Conclusion

Choosing between LAS and LAP depends largely on your urgency, financial situation, asset availability, and long-term financial goals. LAS offers flexibility, rapid processing, and continued investment growth, making it ideal for immediate and short-term needs. LAP suits larger, structured financial requirements, with potential tax benefits.

In case LAP or LAS does not work for your needs, Quicklend provides a smart, fast, and flexible solution specifically tailored for mutual fund investors.

This is general guidance. For personalized loan advice, contact our advisors.