Home Loan Top-up vs. Personal Loan: Which one is best for you?

by Finway FSC Empowering People Financially

When people are in financial need, they lean towards lending money for friends and relative rather than a bank. But in these tough times, our need can’t be sufficed by acquaintances. In such a situation, people opt for a loan. However, people lack knowledge about the various type of loans and which one suits them.

Today, we will discuss Home Loan top up and personal loans. Both of these loans are easy for customers to help in their financial crisis. Both of these loans can be used for various purposes like education, medical emergency, wedding, vacation, business, etc.

What is a Home Loan Top-up?

Home loan Top-up is what it says it is. It is a top-up to your existing home loan. You can avail for this loan; you need to repay the existing home loan for a certain period as agreed in the loan agreement. People can avail tax benefit on home loan top-up only if the loan is used for education purposes or home-related issues. The best thing is borrowers doesn’t need new documentation for this top-up.

What is a Personal Loan?

A personal loan is taken to meet our individual financial requirement. Personal loan can also be seen as an emergency loan online that is processed without any collateral. However, bank look at the individual capacity to repay, income, salary, and most importantly, credit score. But, banks offer a high-interest rate compared to other loans because of no collateral.

The basic difference between Personal Loan and Home Loan Top-up:

Personal loan has a lower interest rate than Home loan top-up. Home Loan Top-up have a higher repayment period than Personal loan. Personal loan has lengthy documentation due to no collateral while Home Loan Top-up is easy to process. Hence, Personal loan is quick to approve, while Home Loans require many checks.

Final Verdict:

By now you would have a clear idea about the two loans and your decision of which one to choose must be simplified. If you are someone who has already avail for a home loan, then you will be benefitted with the home loan top-up. You will have lower EMIs and higher repayment tenure. Personal loans are for those who require a small amount of money for a quick period.

If you are a first-time borrower, then we highly recommend you to compare all the options available to you before finalizing on any loan.