In the wake of the Coronavirus pandemic, countless people are still struggling to get back on their feet. In times like these, opting for personal finance can be a ray of hope to overcome a cash shortage. However, if you are already servicing a home loan, you have another option during a financial contingency: a home loan top-up.Let us explore these two loan products in detail.
What is a personal loan?
Personal finance solutions are among the most popular loan products, available for a vast variety of purposes. It is an unsecured loan that allows you to borrow a lump sum without pledging any security. You also don’t have to specify a reason for borrowing it and can use it to meet any immediate financial requirement.
What is a home loan top-up?
A home loan top-up is a supplementary loan you can borrow over and above your existing home loan amount to meet any financial obligation. As a result, it can act as your safety net during emergencies. However, the interest charged on the top-up facility is slightly higher than on the home loans.
Additional Read: Can I Take a Personal Loan and Home Loan Simultaneously?
Personal loan vs home loan top up – What’s better?
- Availability: Perhaps the most significant personal loan vs home loan top up difference is that you can only borrow a top-up loan from your current lender. On the other hand, you can borrow personal finance from any lender.
- Interest rates: Since personal finance is an unsecured credit, the interest rates can be slightly higher than the home loan top-up rates. However, if your credit history is spotless, you’re more likely to get competitive rates on your loan.
- Collateral: Another significant point of difference between the two products is the collateral. You don’t need to pledge collateral for personal finance. Whereas, in the case of a home loan top-up, your house or property acts as the collateral.
- Loan processing: Since you already have a relationship with your lender, you don’t need to go through the verification process again. This allows you to enjoy quick processing on the top-up facility. You can also enjoy fast processing and instant approval on personal finance if you apply with your existing lender.
- Unrestricted usage: You’ll be happy to know that you can use both the loan products for diverse expenses. This is because there is no restriction on the end-use for both of these loans.
Irrespective of which loan product you choose, remember a good credit history is a crucial home loan top up and personal loan eligibilitycriterion. So, if you want to boost your chances of approval, it’s prudent you maintain a healthy CIBIL score and pay your monthly instalments on time.
Additional Read: Which One Should Be Taken – Home Loan Top Up or A Personal Loan?
Whether you opt for a home loan top-up or personal finance, you can always turn to Tata Capital. We offer a myriad of customisable loan products to fit your needs. With our personal finance offerings, you can take advantage of instant approval, quick disbursal, repayment flexibility, and attractive personal loan interest rates. All you have to do is give us a call, or you can log on to our website today!