| Home Loan | Personal Loan | |
|---|---|---|
| Collateral | Yes | No |
| Rate of Interest | Usually Low | Usually High |
| Principal Amount | Maximum of up to Rs. 10 crores | Maximum of up to Rs. 25 lacs |
| Repayment Tenure | Up to 30 years | Up to 60 months |
| Penalty | Seizing of collateral by the lender | Legal Action/ Low Credit Score |
A home loan or a house loan is an amount of money that is borrowed by an individual from a bank or any financial institution to buy/construct a house. Home loans have either variable or fixed interest rates. The individual must pay back the borrowed amount along with the interest charged in monthly installments throughout the loan repayment tenure. The repayment tenure can vary depending on various factors associated with the loan. A home loan is also a secured loan. It means the borrower will have to submit collateral. In-home loans, the lender usually uses the borrower’s home as collateral. And hence, if the borrower does not pay the EMIs and becomes a defaulter, then the lender can seize his house and sell it to recover the loan amount.
A personal loan is an amount of money that can be borrowed by an individual from a bank or any lender for satisfying expenses involving travel needs, medical emergencies, house renovation, shopping household items, etc. A personal loan is also an unsecured loan. It means the borrower does not have to submit any collateral or security to get this loan. The borrower can repay the loan amount by paying for it in monthly installments. The monthly EMI also includes the interest amount charged by the lender or the bank. Personal loans can also be used to consolidate other debts.
As already explained above, an individual can take a house loan to buy a house and a personal loan for various types of expenses. Though the debt for both can be resolved by paying monthly EMIs, there are major differences between the two types of loans.
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Collateral
Rate of interest
Amount
Repayment Tenure
Penalty
Loan Amount
Min ₹10
Max ₹10,000,000
Rate of Interest
Min 5%
Max 25%
Loan Tenure
Min 3 months
Max 72 months
Now that you know the differences between a home loan and a personal loan, you can take a decision accordingly and apply for one. If you already have a home loan running and you need more money, then you can opt for a top-up home loan too. If you wish to purchase household items or furniture, then you can opt for a personal loan. Most importantly, ensure that your loan repayments are made on time to avoid penalties.
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Home loans and personal loans have their own purposes. If you are looking to buy a house, a home loan is the best for you. But if you need a loan to fulfill small goals, a personal loan is a great option. Home loans mostly are for bigger amounts and have longer tenures as compared to personal loans.
Personal loans generally do not have tenures that last up to 15 years. They are mostly 5-7 years long, depending on the lender.
Yes, you can use the funds from a personal loan to pay a downpayment for a property.
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Disclaimer
The starting interest rate depends on factors such as credit history, financial obligations, specific lender's criteria and Terms and conditions. Moneyview is a digital lending platform; all loans are evaluated and disbursed by our lending partners, who are registered as Non-Banking Financial Companies or Banks with the Reserve Bank of India.
This article is for informational purposes only and does not constitute financial or legal advice. Always consult with your financial advisor for specific guidance.
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