Top-up home loan vs personal loan

Taking out any type of loan entails a great deal of responsibility and a substantial financial commitment. This is because whatever you borrow is a loan that must be returned, with interest, over the period of time you specify. As a result, you should be extra cautious and think carefully before applying for a loan. Most banks and non-banking financing organizations provide many types of loans to meet people’s various demands, such as home loans, automobile loans, personal loans, gold loans, and so on. Some of these loans are secured and some are unsecured. 

Diverse types of loans serve different reasons and assist people in meeting their needs. People are frequently perplexed when deciding between a top-up house loan and a personal loan. While a home loan is the greatest option for buying a new home, a top-up home loan can help you secure some more cash for a home extension, renovation, or improvement. These requirements can also be met with the help of a personal loan. Another possibility is to take out a personal loan. But, before you make a decision, consider the following comparison of a top-up home loan vs. a personal loan.

What is a personal loan?

Personal loans are unsecured loans that are available from all of the major lending organizations. The loan can be applied for online from the comfort of one’s own home or office. This loan’s interest rate is a little higher than others, so you should consider it twice before taking it out. It, on the other hand, has no end-use restrictions and can be used for any personal purpose.

You can use the money you acquire from a personal loan to fund a vacation, buy a gadget, pay for medical treatment, renovate your home, pay for a wedding, fund your children’s education, and so on.

What are home loan top-ups?

A top-up loan is a loan obtained from your home loan lender in addition to your existing home loan. Because you already have an account with the lender, the loan just requires minimum documentation.

You can renovate, extend, or conduct any other type of building or renovation work for your property with Top Up home loans. However, there are some restrictions on end-use, but the best part is that the interest rate for a top-up personal loan is the same as for house loans, making it more convenient for customers.

Interest rate

A house loan top-up is always on top of an existing home loan. The benefit of choosing it is that you will receive a top-up home loan at the same interest rate as your current home loan. Consumers will find your borrowing method convenient and reasonable as a result of this.

Another thing to keep in mind is that the lender views your home as collateral and does not require you to offer additional security. You also obtain it at a lower rate. When you take out a personal loan, the interest rate is always high, usually between 10 and 16 percent. A personal loan, on the other hand, is fully safe and requires no security or collateral.

Tenure period

Home loans are typically available for 20 to 30 years, with a 5- to 7-year extension available if you opt for a top-up loan above that. A personal loan, on the other hand, can have a maximum loan term of up to 5 years. So, when it comes to payments, top-up house loans give you more options.

Loan disbursal time

The loan disbursement time for a top-up personal loan is usually 4-5 days. This is due to the fact that it is a secured loan, and your lender will need to update the paperwork that was completed when you took out the loan. However, if you have an emergency and require immediate funds, a personal loan is the ideal solution. The majority of lenders now provide instant personal loans, with funds credited to your account within hours of online processing. With the bare minimum of documentation, You can get a personal loan if you need money right now.

End-use limitation

When you take out a personal loan, there are no constraints on how you can use it. You are free to put the money you borrowed wherever you like, as long as it meets your needs. However, if you obtain a top-up home loan, you will be subject to some end-use restrictions. This includes just utilizing the cash for home building, remodeling, or extension, as well as panting.

However, the most crucial distinction is that a top-up home loan can only be obtained by those who already have a home loan. While everyone can obtain a new personal loan to satisfy his or her financial requirements. If you currently have a home loan and are in need of cash, don’t forget to think about things like the EMI amount and the tax benefits before taking out one of these loans.


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