Can I take a Home and Personal Loan Together?

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4 min 17 Jan 2024

Taking a Home and Personal Loan Together

Highlights:

Things to Keep in Mind While Availing of a Personal Loan and Home Loan Together
Document Required for a Home or Personal Loan

Regardless of the number or type of loans you currently have, as long as you meet your lender’s income and eligibility criteria, you can secure an additional loan. However, managing the repayment of two or more loans simultaneously can be challenging. If you are considering availing of both a Home Loan and a Personal Loan, there are a few key factors to keep in mind.

How Can You Take a Personal Loan and a Home Loan Together?

Consider Opting for a Top-up Loan

These days, most lenders offer a Top-up Loan to borrowers who opt for a Home Loan Balance Transfer. If you need funds to cover your interior cost or expand your business, you can consider availing a Top-up Loan instead of a personal loan. Top-up Loans offer several advantages over personal loans.

To begin with, Top-up Loans are low-interest options, typically 1% to 2% higher than the Home Loan interest rate. In contrast, Personal Loans can be more expensive, with interest rates generally ranging from 12% to 25%. Additionally, while you need to repay Personal Loans within 5 to 7 years, Top-up Loans offer a longer repayment tenor, aligning with the repayment period of your Home Loan.

However, based on the lender's policy, you can avail of a Top-up Loan only after making timely payments on a certain number of EMIs, and proving yourself as a reliable borrower. If you meet these conditions, you can consider applying for a Top-up Loan instead of a personal loan.

Maintain a Good Debt-to-Income Ratio

The debt-to-income ratio refers to the ratio of your monthly debt payments and gross income. In other words, when you divide all your EMIs by your total net income, you get your debt-to-income ratio. You have a better chance of availing of a personal loan and a Home Loan together if your debt-to-income ratio is low.

Maintain an Excellent Credit Score

If you already have a Home Loan and wish to avail of a personal loan, your application is more likely to be approved if you have a high credit score.

When it comes to Home Loans, lenders typically sanction a loan if your CIBIL score is above 750. However, if you want two loans at the same time, you can convince your lender of your creditworthiness and repayment capacity and the best way to do that is to maintain an excellent score.

Borrow What You Can Easily Repay

This is the first rule of borrowing: borrow what you can easily repay. Paying off two loans is no easy task. If you think it will be hard for you to pay the EMIs of both loans, it is recommended that you take only one loan and go for interiors or other expenses after a few months or years when you have built up some savings.

Let us now look at the eligibility criteria and document requirements for a Home Loan.

Document Required for a Home or Personal Loan

Whether you are applying for a Home Loan, know that preparing in advance will help you experience a hassle-free loan application process. So, whether you are applying for a Home Loan or a personal loan, keep these documents ready with you:

Mandatory documents such as PAN Card or Form 60
KYC documents (i.e. address and identity proof documents, such as Aadhaar Card, Passport, Driving License, Utility Bills, etc.)
Passport-size photographs
Form 16 or latest salary slips (for salaried individuals)/ ITR Document and P&L Statement for the last 2 years (for self-employed individuals)

Bank account statements for the last 6 months
If you are a self-employed applicant, you must provide documents for proof of business that establish a minimum of 3 years of business vintage.

Please note that personal loans can be approved and processed more easily than Home Loans and therefore, if you are just applying for a personal loan, you may not need these documents. However, if you are applying for a Home Loan, your lender may ask you for more documents, over and above these.

*Terms and conditions apply.

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