Personal Loan or Top Up Home Loan: Banks or finance companies offer top up home loans to existing home loan customers to meet their financial needs or lack of funds. Its amount can be used for any purpose which makes it a personal loan option for already existing home loan customers. Due to the difficulties arising due to Covid-19, in the last few months, there has been an increase in the number of such people, who are exploring all the options of finance/ loans including personal loans. In such a situation, the question arises whether it is better to take top up home loan or personal loan? Let’s understand.
Personal Loan or Top Up Home Loan Comparision
|Criteria||Personal Loan||Top Up Home Loan|
|Processing Time||Money transfer takes less time (1-2 days)||Money transfer takes longer (1-2 weeks)|
|Interest Rate||Personal loan rates range from 9 to 26% per annum, depending on the credit score of the borrower. Generally, applicants with a credit score below 750 do not get a personal loan.||Top up home loan is secured, hence its rates are lower as compared to personal loan. Top up home loan interest rates are usually equal to or slightly higher than home loan rates.|
|Repayment Period||The tenure of personal loan is usually up to 5 years, some banks take up to 7 years and then do it with lower interest rate. Top up home loan EMI will be less as compared to personal loan due to longer tenure.||The repayment tenure of the top up loan cannot exceed the remaining tenure of the existing home loan. Moreover, most of the companies and banks limit the tenure of the top up home loan to 15 years.|
|Loam Amount||Depending on the monthly income and repayment inefficiency of the personal loan applicant, it can range from ₹ 50000 to ₹ 20 Lakh.||You can get a top up loan as much as the amount you pay out of your existing home loan Banks can sanction a top up home loan of up to 50 lakhs or more. Easier EMIs due to longer tenure and thus the customer may take larger Top up home loan.|
Personal Loan or Top Up Home Loan?
Your decision will depend on the size and timing of the loan: Top up is a better option for existing home loan customers than a personal loan because top up home loans offer lower interest rates along with larger loan amount and repayment tenure. Personal loan is a good option for those who need money urgently but when their existing bank is not offering a pre-approved top up home loan.