Published on January 06, 2026 | By LoanPao Team
In 2026, choosing between a Personal Loan (unsecured) and a Mortgage Loan (Loan Against Property - LAP, secured) is one of the biggest financial decisions. Both serve different purposes and come with their own advantages. This complete guide will help you understand the differences and make an informed choice.
Detailed Feature Comparison (2026 Rates & Rules)
| Feature | Personal Loan | Mortgage Loan (LAP) |
|---|---|---|
| Collateral | No collateral required | Property (residential/commercial) required |
| Interest Rates | 9.99% – 24% p.a. (average 13-18%) | 9.05% – 12.75% p.a. (average 9.5-11.5%) |
| Loan Amount | ₹1 lakh – ₹40 lakh | Up to 70% of property value (₹5 crore+ possible) |
| Tenure | 1–5 years | 5–20 years |
| Processing Time | 1–3 days | 7–15 days |
| Processing Fee | 0.5–3% + GST | 0.5–1.5% + valuation charges |
| Prepayment Charges | Nil (floating rate) | Nil to 2-4% |
| Tax Benefits | Limited (only specific uses) | Yes – interest deductible u/s 24 & 37(1) if used for home |
Pros & Cons of Personal Loan
Advantages
- Fast approval & disbursal (same-day possible)
- No risk to property
- Minimal documentation
- Flexible end-use
- No property valuation needed
Disadvantages
- High interest rates
- Limited loan amount
- Shorter tenure → higher EMIs
- No tax benefits in most cases
Pros & Cons of Mortgage Loan (LAP)
Advantages
- Lowest interest rates
- Highest loan amounts
- Long tenure → low EMIs
- Tax benefits on interest
- Overdraft facility available
Disadvantages
- Property at risk
- Longer processing
- Valuation & legal charges
- More documents required
EMI Comparison Example (₹30 Lakh Loan)
| Loan Type | Rate | Tenure | EMI | Total Interest |
|---|---|---|---|---|
| Personal Loan | 14% | 5 years | ₹69,700 | ₹11.8 lakh |
| Mortgage Loan | 10% | 10 years | ₹39,600 | ₹17.5 lakh |
| Mortgage Loan | 10% | 15 years | ₹32,200 | ₹28 lakh |
Monthly savings with Mortgage Loan: ₹30,000–₹37,500
When to Choose Personal Loan?
- Urgent funds needed
- No property ownership
- Small-medium amount
- Short-term requirement
- Zero asset risk preferred
When to Choose Mortgage Loan?
- Large funding required
- Own property
- Want lowest EMI
- Long-term repayment
- Tax benefits needed
Expert Tips for 2026 Borrowers
- Check CIBIL score (free on LoanPao)
- Compare 5+ lenders
- Use EMI calculator
- Read Key Fact Statement
- Avoid multiple applications