Loan against Property vs Gold Loan: Everything You Need to Know

Nov 3, 2021

Loan against Property vs Gold Loan: Everything You Need to Know

Individuals owning sufficient assets often view secured loans as a way out during emergencies. Advances like gold loans and loans against property are two popular secured borrowing modes owing to no end-use restrictions on utilizing the received funds.

Detailed knowledge of each of these loan types is necessary to make the right choice during a crisis. To help you with the same, here is a discourse on gold loan vs loan against property and their individual features.

What is a Loan against Property?

It is a type of mortgage loan that individuals can avail themselves of by mortgaging property. Individuals can provide both commercial and residential properties as collateral to qualify for the loan. Financial institutions sanction a specific percentage of the property’s value as a loan. This evaluation depends on the collateral’s current market value. At the same time, lenders inspect an applicant’s eligibility when deciding the loan amount.

What is a Gold Loan?

This is another type of secured finance. As is evident from its terminology, individuals can pledge their gold ornaments to avail financial assistance. Lending institutions examine the pledged item’s purity and the prevailing loan-to-value ratio to sanction the final loan amount.

So, what is the difference between these two secured loans, you ask?

Well, gold loan providers are not hyper-vigilant about the borrower’s eligibility like property loan providers. In addition to this, these two funding options are different in terms of many more aspects.

Features of Gold Loans and Property Loans

To understand how a gold loan differs from this mortgage loan, individuals need to have a detailed idea of their individual features. So here’s a tabular representation of their features:

The following discourse will help potential borrowers perform a thorough gold loan vs loan against property comparison to establish their primary dissimilarities.

Features of a Loan Against Property

Here are some prominent features of a loan against property.

1. Collateral: Borrowers need to submit all original documents related to property ownership to their lenders when availing a loan against property. Such documents then remain with the lending institutions until the completion of loan repayment.

2. Interest rate: Mortgage loan providers offer these funds against fixed and floating interest rates.

3. Additional costs: Besides interest, individuals need to pay other charges when availing a loan against property. These include processing fees, documentation charges, and foreclosure charges, among others. Make sure to check with your lender about all applicable fees in advance to determine the total cost of borrowing.

4. Repayment tenure: Loans against property generally come with longer repayment tenures ranging up to 20 years. As such, the cumulative interest is quite high owing to a longer duration. This increases the total borrowing cost, making property loans an expensive mode of borrowing.

5. Eligibility criteria: Applicants need to meet the following eligibility parameters to qualify for a property loan:

  • Own a commercial or residential property in his/her name.
  • Should be aged between 25 and 70 years.
  • Must be a salaried or self-employed individual.
  • Must have a minimum monthly income according to the lender’s requirement.

6. Documentation: Besides meeting the above eligibility parameters, individuals should submit the following documents to avail a loan against property:

  • ID proof
  • Proof of residence
  • All documents related to property ownership
  • Income proof, including recent salary slips and bank statements.
  • Other financial documents, like IT returns and financials of the previous 3 years.

7. Processing time: An elaborate documentation process contributes to an extended verification time. This, in turn, delays loan transfer.

Note that the eligibility parameters and list of documents required for a loan against property may vary depending upon the loan provider.

Such stringent eligibility requirements and tedious documentation process might come across as non-viable for several individuals. In case you find it difficult to acquire funds via this mode, opting for a gold loan is an ideal alternative.

Features of a Gold Loan

Here is a list of some beneficial features of a gold-backed loan as opposed to property loans.

  1. Collateral: Individuals need to collateralize their gold ornaments to their lender to avail funds against it. These pledged items are stored in high-security vaults until the completion of tenure.
  2. Interest rate: Gold loan providers offer these funds against fixed interest rates which are remarkably lower than the average loan against a property interest rate. Individuals can avail interest rates as low ( as Rupeek's 0.49% per month) from prominent lending institutions.
  3. Additional cost: Among the other charges adding to the total borrowing cost, leading gold loan providers to impose zero foreclosure and prepayment charges. This makes loans against gold jewelry even more attractive for borrowers.
  4. Repayment tenure: Gold-backed funds are generally short-term loans, ideal for a temporary cash crunch. Borrowers can get done with the repayment quickly within 6 to 18 months. Additionally, a short tenure also means lesser interest outgo, thus bringing down the repayment burden remarkably.
  5. Eligibility criteria: Contrary to loan against property eligibility criteria, the parameters to qualify for a gold loan are way lenient.  To avail a loan against gold items, you only need to:
  • Be aged above 18 years.
  • Own an adequate amount of gold.

This makes a gold loan an ideal funding solution for individuals who cannot fulfill the eligibility criteria or submit the necessary documents needed for a loan against property.

  1. Documentation: Besides lenient eligibility criteria, leading NBFCs also have minimal documentation requirements. Applicants only need to submit their KYC documents like ID and address proof to qualify for a gold loan.
  2. Processing time: Such limited paperwork also speeds up the loaning process, facilitating faster approval and disbursal.

The above discourse on the individual features of a gold loan and a property loan must have helped establish an idea of the primary differences between the two.

However, here is a table on gold loan vs loan against property comparison to give you a brief overview of their differences.

Which loan is better Gold Loan or Loan against Property?


Gold Loan

Loan Against Property

Collateral type

Gold jewelry 

Commercial/residential property

Loan tenure

Short-term, up to 6-18 months

Usually, ranges from 1 to 20 years

Additional charges


Applicable for prepayment, foreclosure, etc.

Eligibility criteria




Minimal, only requiring KYC documents 


Processing time

Takes a maximum of 1-2 days 

Can take up to 1-4 weeks 

As one can note, the features of a gold loan are much more lucrative for borrowers. In order to be a beneficiary of the above features of a gold loan, individuals can turn to Rupeek. In addition to such advantages, we offer a number of additional features that amplify the benefits of a gold loan in India.

What Are the Additional Features of Rupeek’s Gold Loan?

Rupeek is an RBI-certified NBFC operating in the gold loan lending field for over 5 years now.   With a customer base comprising 1 lakh+ Indian families, we offer the best deals on gold-backed funding with customer-friendly policies.

Have a look at some of the attractive benefits of our gold-backed financing:

  • High LTV ratio

Our highest loan-to-value (LTV) ratio of 80% lets individuals make the most out of their gold ornaments. Depending on the collaterals’ purity and the current market value of gold,   borrowers can avail loan amounts worth up to Rs.1.5 crore. In this regard, individuals can use our online calculator to estimate the loan amount available against their jewelry before applying.

  • Flexible repayment

Rupeek allows individuals to choose from multiple repayment schemes at their convenience. Borrowers can choose to repay via EMIs. Alternatively, they can make any amount of payment at any time during the tenure, including a one-time bullet payment.

  • Doorstep service

Borrowers need not risk their collaterals’ safety by stepping out of their homes. You can simply apply for a loan against gold online on the Rupeek app or website as per their convenience. Once received, a loan representative will meet you at your provided address to carry out the verification and gold appraisal process. Upon approval, customers will get funds transferred to their accounts within 30 minutes under the loan manager’s supervision.

  • Safety of pledged gold

Rupeek assures customers of 100% safe gold handling and storage with ISO 9011:2015 certified security protocols. Pledged items are transported in a GPS-secured bag and then stored in safe vaults of partner banks within 3 kilometers of a borrower’s residence. These gold items then undergo 24x7 military-grade surveillance.

Moreover, we provide 100% insurance coverage on gold ornaments against any sort of damage, misplacement, or theft.

  • Loan renewal

A gold loan vs loan against property comparison shows an added advantage of the former to be its loan renewal feature. After completing a loan term and releasing collaterals, borrowers can choose to re-pledge the same gold ornaments to avail a completely new loan. This makes for a way faster loaning process since the lender already has details concerning the applicant’s eligibility details, documents, and gold evaluation.

Therefore, customers can get instant approval and disbursal. However, the funds will come with separate terms and conditions than the previously closed loan.

  • Gold loan overdraft

In addition to the above advantages, existing Rupeek customers can avail an extended credit line facility by pledging some additional gold items under Rupeek Quick. Thereafter, individuals can avail of instant funds via their in-app wallet at their convenience. This can be an affordable way for individuals to meet short-term cash crunches as they need to pay interest only on the utilized amount.

Additionally, this process involves no additional documentation as funds are sanctioned on top of an existing loan.

Does the above discourse on gold loan vs loan against property comparison make the former seem like a more convenient borrowing option for you? If yes, place a loan request with Rupeek at the earliest and avail the best deals on gold-backed funding.

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