How to Take a Personal Loan if You Already Have a Home Loan

Owning a home is a huge milestone, and for many, a home loan is the best way to achieve that goal without draining all your savings. However, even with a home loan covering most of the property cost, there are still some expenses—like the down payment, renovations, or registration—that need liquid funds. Some people dip into their emergency savings or sell off long-term investments to cover these costs, which can derail financial plans. But here’s a better idea: a personal loan.

It’s fast, requires no collateral, and offers flexible repayment terms. You might be wondering: Can I take out a personal loan while I’m still paying off my home loan? The answer is yes. Let’s dive into how you can manage both loans and what you should consider before applying.

• Home loans require the property as collateral until the debt is fully repaid.

• Personal loans are unsecured, so no collateral or guarantor is needed.

• Home loans usually have lower interest rates since the lender has security in the form of property.

• Personal loans carry higher interest rates because they’re unsecured, which increases the lender’s risk.

• Home loans can cover large amounts to finance the purchase of property.

• Personal loans offer smaller amounts suitable for short-term financial needs.

• Home loans come with longer repayment periods, often ranging from 10-30 years.

• Personal loans have shorter terms, usually 1-5 years, making them quicker to pay off.

• Absolutely, you can take both loans at the same time! There’s no hard limit to how many loans you can have as long as you meet the lender’s eligibility criteria.

• It’s not uncommon for borrowers to take out a home loan for the property purchase and a personal loan to cover associated expenses, such as renovations, furniture, or even a down payment.

• However, managing two loans means managing two sets of EMIs (Equated Monthly Instalments), so be sure your budget can handle it.

• Also, it’s crucial to have a good credit history and a solid repayment capacity to boost your chances of approval.

Taking on both a home loan and a personal loan can be a great financial strategy, but it’s important to weigh a few key factors:

• Your credit score is a vital factor lenders use to assess your repayment ability.

• Lenders pull a hard inquiry on your credit report, so having a score of 700-750 or higher improves your chances of approval for both loans.

• A good credit score reflects your creditworthiness and repayment history, which is crucial when applying for multiple loans at once.

• Your debt-to-income ratio is the percentage of your monthly income that goes toward paying debts.

• Lenders generally prefer that no more than 50% of your income is used for debt repayment.

• If your monthly EMIs—across both loans—exceed this, you might have difficulty getting approved.

• A lower DTI ratio shows lenders that you have enough disposable income left to cover living expenses, reducing their risk.

• Handling two loans requires careful budgeting, so make sure you choose loan terms that fit your financial capacity

• Opt for lenders who offer flexible repayment options and allow you to pick a tenure that keeps your monthly EMIs affordable.

• Keeping EMIs within your budget ensures that repaying both loans doesn’t overwhelm you.

• Applying for a joint loan with a parent, spouse, or partner can strengthen your repayment capacity.

• With two incomes and two credit histories, your chances of approval are higher, and the lender may feel more confident in approving both loans.

• Joint loans can also offer better terms, such as lower interest rates, since the risk is spread between two people.

• Taking on two loans at the same time requires solid financial planning.

• Clear any existing debts and ensure you have enough disposable income to manage both EMIs without straining your monthly budget.

• Use a Personal Loan EMI Calculator to see whether you can comfortably handle the combined instalments each month.

• After reviewing your financial situation and considering the pros and cons, only apply for the loans once you can manage them.

• If you’re juggling two loans, it’s important to prioritise repayments, particularly for high-interest debt like personal loans.

• Set up automatic payments to ensure that you never miss an EMI, as missed payments could hurt your credit score and lead to additional charges.

• Keep an eye on interest rates, especially if your loans have variable rates.

• Rising interest rates could increase your EMIs, so it’s essential to factor this into your financial planning.

• Having an emergency fund in place is essential, particularly when handling multiple loans.

• Unexpected expenses or changes in your income could affect your ability to repay, so make sure you have a financial safety net.

Taking on both a home loan and a personal loan can be a smart financial move if planned properly. A personal loan can provide the extra funds to cover home-related expenses, such as renovations or down payments, while your home loan takes care of the property purchase itself.

However, handling two loans means being extra diligent about your finances. Ensure your credit score is in good shape, manage your debt-to-income ratio, and choose repayment terms that fit your budget. By taking these steps, you can comfortably handle both loans and achieve your financial goals without unnecessary stress.

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