When looking for appropriate funding to build your dream home, you may have to look beyond sourcing just the home loan. In order to complete your dream home look, you might wonder if you can take a personal loan apart from a home loan.
The answer is yes, you can, as technically, there is no cap on the number of loans you can take as long as you can repay them. In certain cases, getting an instant personal loan in tandem with a home loan makes sense in case of the following scenarios – gathering funds for the 10-20% down payment towards your home; renovating your newly constructed home with state-of-the-art interiors; buying gifts for your family members as a celebration of owning a home et al. In case you want to opt for this duo, you need to ensure that you can meet the financial obligation of paying towards both loans every month as per your repayment tenure. Besides this, you need to consider the following factors to ensure your application for both loans is processed and approved, and that you know the following details before applying for them.
How Does Personal Loan Work?
Personal loans are collateral-free unsecured loans that give borrowers access to instant cash up to the full principal loan amount in exchange for regular EMIs over a fixed tenure. An added benefit that borrowers get when applying for a personal loan is that they can get it to fund any expected or unexpected expense.
Does Personal Loan Impact Home Loan?
Technically, all your previous or existing loans affect your ability to get a home loan or any other loan because it reflects your ability to manage your debt and payment terms. Mainly, there are two major things banks might look at – how you have managed your loans and how they impact your debt-to-income ratio.
On the other hand, a home loan is usually a long-term loan. Therefore, making monthly payments towards it is crucial as it needs a long-term commitment – for you, as well as for the bank. If you’ve managed to pay all previous bills and loans on time, you have already improved your overall credit score which increases your chances of getting an instant personal loan as well as a home loan.
You Already Have a Personal Loan/Home Loan
If you are already paying towards either a personal or home loan and need to apply for the other one, then the best thing for you is to continue to make the payments towards it without faltering. Even if you can’t prepay an acquired loan and would like to apply online for a personal or home loan, simply focus on maintaining a positive payment (EMI) record to tilt things in your favour.
Interest Rates
Many banks offer affordable personal loans that you can apply for online for as low as 10.49%. Home loans are usually cheaper than this. So, by using a personal loan online calculator, you can assess how much extra you would need to budget for an additional EMI every month.
Owning a home is exciting but a huge responsibility as well. If you already have a personal loan to pay off – although its repayment tenure is shorter (1-5 years) – make sure you have sufficient income coming in every month to continue making monthly EMIs towards both loans.
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