A home loan is hands down the best way to fund a property purchase. It allows you to own your dream home while keeping your savings intact. However, it’s not uncommon for homebuyers to exceed their initial budget. It can be anything, from the down payment to renovation costs.
In such cases, you don’t need to dip into your savings to cover the additional expenses. There’s another option available – a personal loan! Yes, you can rely on personal finance to cover all your unplanned costs.
Many individuals wonder, “Can I take home loan and personal loan together?” or rather rephrasing the question, “Can i get a home loan and personal loan at the same time?” Yes, technically, there’s no upper threshold to the number of loans you can borrow. However, the answer largely depends on eligibility, income, credit score, and existing liabilities. While a home loan can fund your dream property, a personal loan can give you additional funds for related expenses like interiors, registration charges, or unexpected costs.
Yes, it is possible to take a personal loan and home loan together if you meet the lender’s criteria.
However, before you apply for a second loan, there are some things you must consider.
What Are Home Loans and Personal Loans?
To decide if you can take a personal loan and home loan together, let’s start with understanding the basics:
- Home Loan: A home loan is a secured loan taken to buy a house or property. The property acts as collateral, which usually results in lower interest rates offered by lenders. Home loans also offer long repayment periods, typically between 10 and 30 years, to help borrowers manage their monthly EMIs comfortably.
- Personal Loan: A personal loan is an unsecured loan provided by financial institutions based on your income and credit profile. Such a loan can be used for a variety of needs, such as medical expenses, education, travel, wedding or consolidating debts. There is no restriction on the usage of a personal loan.
Key factors to consider before applying for two loans at the same time
Credit Score Impact
Your credit score reflects your consistency in paying back loans. A high enough credit score of 700 or above will put you in a lender’s good books and make acquiring loans easier.
Say you already have a home loan to your name and need a second loan for personal use. In that case, you’ll need a spotless credit report to acquire another loan. The best way to boost your score is to repay your home loan EMIs and credit card bills on time. Doing so can also help you get affordable personal loan interest rates.
Additional Read: Does Prepayment of Personal Loan Affect Your Credit Score?
Debt-to-Income Ratio
Apart from your credit history, lenders also consider how well you’re handling the home loan EMIs with your current income. If you already have your hands full with a home loan, a lender might not extend you another. Ideally, the amount you spend every month servicing loans must not exceed 50% of your salary. This is because the higher your debt-to-income ratio is, the lesser financial freedom you have. Lenders often review such a scenario negatively.
In such a case, it’s best to demonstrate a stronger repayment capability. To do so, you can apply for a loan jointly with your parents or spouse. With two heads, your chances of acquiring a second loan would improve dramatically.
Additional Read: What is Debt-To-Income (DTI) Ratio & How to Calculate It?
Financial Planning Considerations
Even if you have a favourable DTI ratio and credit score, a second loan can be a significant financial burden if you already have a home loan. That’s why you must consider your financial obligations first and whether you’ll be able to achieve them with two loans.
With personal finance, you do get the flexibility to choose your tenure. So, the best thing to do is calculate your projected instalments using a personal loan EMI calculator. This will give you a perspective on how much you’ll save each month after servicing the two loans and plan your second loan accordingly.
Loan Approval Criteria
Personal loans and home loans are assessed using different sets of criteria by lenders. For a home loan, factors such as your credit score, income stability, employment history, and loan-to-value (LTV) ratio are carefully evaluated. Personal loans, on the other hand, are unsecured and mainly depend on your creditworthiness, existing financial obligations, and steady income.
Wondering can we take personal loan and home loan together? Applying for both loans at the same time can be challenging. Any changes in your financial situation during the application process, such as a drop in income or an increase in liabilities, could affect your eligibility and the lender’s approval decision.
Loan Amount and Affordability
Wondering “Can I get personal loan and home loan together?” Before applying for a personal loan and home loan together, consider whether you can comfortably manage the combined monthly repayments. Think about your current income, regular expenses, and existing savings. This will help you determine how much you can realistically afford to borrow without putting unnecessary strain on your finances.
Remember, lenders also review your debt-to-income (DTI) ratio to assess your repayment capacity. Taking on more than you can handle could lead to financial stress and potential defaults.
Documentation and Processing Time
Applying for multiple loans at once means you will need to submit detailed documentation for each application, such as income proof, identity documents, and bank statements. Processing times also differ between personal loans and home loans, which can cause delays in approval and disbursement.
Interest Rates and Terms
Before finalising your loans, carefully compare the interest rates, processing fees, and repayment terms offered by different lenders for both personal and home loans. Look for options that align with your financial goals and offer the most favourable terms.
Benefits of Taking Home and Personal Loans
- Meet Multiple NeedsL: Taking both loans can be a good way to manage different financial goals. You can buy a home and cover urgent personal expenses at the same time.
- Tax Benefits: Home loans in India offer tax deductions of up to Rs. 1.5 lakhs under Section 80C and up to Rs. 2 lakhs under Section 24B of the Income Tax Act.
- Build a Healthy Credit Mix: Managing a combination of secured (home loan) and unsecured (personal loan) credit can potentially strengthen your credit profile, provided you make timely repayments. It can also show lenders you can handle different types of credit responsibly.
Conclusion
Having a personal loan and a home loan together can indeed help you cover the cost of your home purchase without depleting your savings. However, you must plan your two loans wisely to avoid stressing your finances.
If you’re looking for affordable personal finance to meet additional expenses, Tata Capital can help you out! With our easy-to-meet personal loan eligibility criteria, you can easily get a loan together with your existing home loan. Check out our personal finance offerings here.
FAQs
Yes, home loans usually have lower interest rates as they are secured against the property, while personal loans have higher rates because they are unsecured and carry more risk for the lender.
You can apply for two loans simultaneously, but each application triggers a hard enquiry. Multiple enquiries or high loan amounts can impact your credit score if lenders feel your repayment capacity may get stretched.
Lenders will assess your income, employment stability, credit score, debt-to-income ratio, existing obligations, and, in the case of home loans, the property’s value and documentation before approving your loan application.
Review your repayment capacity, existing financial obligations, emergency savings, and long-term financial goals. Make sure you can comfortably manage the combined EMIs without straining your monthly budget.
If you already have a home loan, a top-up loan usually offers lower interest rates compared to a fresh personal loan. However, eligibility depends on your home loan repayment track record and outstanding balance.
You can take both loans together if you meet the lender’s eligibility criteria, have stable income, a strong credit score, and can demonstrate the financial ability to manage both EMIs without defaulting.
08 May 2025
6 mins read
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