Category Archives: Home Loan VS Personal Loan

08 Dec

Home Loan Top up vs. Personal Loan – The Improved Alternative

If you contain an obtainable home loan and a couple of years down the line understand that you require an additional amount, for whatever purpose, what do you do? Most people would believe taking an additional personal loan would be the only alternative they have. Is this true? No, you also have the alternative of topping up your existing home loan.

What is a Home Loan Top Up?

A top up home loan, in easy words, is the additional loan amount that you can borrow, in adding to your pre-existing home loan. If you have an obtainable home loan and have repaid some of it, you are eligible to apply for a loan top up.

Which is an improved Option, Personal Loan or Home Loan Top Up?

Two of the major advantages of a top up home loan in comparison to a fresh personal loan are as follows;

The lower rate of interest: The interest rate for a home loan is 9.15%, which is lower compared to a personal loan, where the rate of interest is 11.49%.
Lower EMI: You can take advantage of a top up home loan for a longer tenure, up to 20 years, while a personal loan maybe available only for a period of 6-7 years. Longer loan tenure straight means lower monthly EMI’s.

Important Points to Think Before Making a Choice

If you believe that a top up loan is your best bet, you need to believe the following.

You become eligible for a home loan top up only if you have a pre-existing home loan and have cleared EMI’s for a minimum period of 6 months.
You have to avail the top up loan from the same lender who has known you a home loan.
You ‘have’ to clear the top up loan before you prepay the home loan.
The loan processing time could take up to a week before the real disbursal.

In the case of a personal loan though, as long as you have the ability to repay and a good credit history, you are free to avail a loan from any lending body, at any known point of time. A personal loan will make sure you are debt-free sooner, even while you pay higher interest.

Depending on your situation, you could choose either of these loan options.

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