When looking for suitable financing to build your dream home, you may need to look beyond just finding a home loan. In order to complete the look of your dream home, you may be wondering if you can take out a personal loan in addition to a home loan.
The answer is yes, you can, because technically there is no cap on the number of loans you can take out as long as you can repay them. In some cases, getting an instant personal loan in tandem with a home loan makes sense to: raise funds for the 10-20% down payment for your home; renovate your newly built home with state-of-the-art interiors; buy gifts for your family members as a celebration of owning a home et al. If you want to opt for this duo, you must ensure that you can meet the financial obligation to pay both loans each month according to your repayment term. In addition to this, you should consider the following factors to ensure that your application for both loans is processed and approved, and that you know the following details before applying.
How does the personal loan work?
Personal Loans are collateral-free unsecured loans that allow borrowers to access instant cash up to the full loan amount in exchange for regular EMIs over a fixed term. An added benefit that borrowers get when applying for a personal loan is that they can get it to fund any planned or unexpected expense.
Does the personal loan have an impact on the mortgage?
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 your payment terms. Primarily, there are two important things banks might look at: how you’ve managed your loans and how they impact your debt-to-income ratio.
On the other hand, a home loan is generally a long-term loan. Therefore, making monthly payments is crucial because it requires a long-term commitment – for you, as well as for the bank. If you managed to pay all previous bills and loans on time, you have already improved your overall credit score, increasing 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 for one personal or home loan and need to apply for the other, then the best thing for you is to keep making the payments without hesitation. Even if you can’t prepay an acquired loan and want to apply online for a personal or home loan, just focus on maintaining a positive payment record (EMI) to tip the balance. in your favor.
Many banks offer affordable personal loans that you can apply for online for as low as 10.49%. Home loans are usually cheaper than that. So, using an online personal loan calculator, you can estimate the extra amount you would need to budget for an additional EMI each month.
Owning a home is exciting, but also a huge responsibility. If you already have a Personal loan to repay – although its repayment term is shorter (1-5 years) – ensure you have sufficient income each month to continue making monthly EMIs for both loans.