Should You Get a Personal Loan to buy a House?

About Personal Loan to Buy a House

Should You Get a Personal Loan to Buy a House?

A personal loan gives you the freedom to use your loan anywhere you want to use it. You can meet any of your personal needs with the help of a personal loan. If you plan to buy a new house, then should you go for a personal loan or not. However, you can do so. Because a personal loan bank does not put any restriction on using an amount of loan, you are advised not to use your personal loan amount to buy a home. There are some reasons behind this.

• The first reason is that usually, the amount of loan offered by the bank in the case of a personal loan is less than the home loan. To buy a home is a large amount of money, so you should go for a home loan rather than a personal loan.
• Another reason to go for a home loan to buy a house is that the rates of interest offered in a personal loan are quite high compared to the home loan. The home loan usually starts at the rate of 8.35% per annum. But rates of interest in a personal loan start from 10.75% minimum. The reason after this is the personal loan is an unsecured loan.
• Besides that, the tenure of the personal loan is shorter than that of a home loan. Your home loan can be extended up to 20 years, but the time period is not that large in the personal loan. You can get a maximum of 5 years to return the personal loan.
• Bank does not allow you to spend more than 40% of your net take income. Means you can use only 40% of your income to pay the EMI’s.  So if you are planning to get a home loan and personal loan together, it may put you in a bad situation. Furthermore, it can create a financial imbalance in your life.
• Still, if you want to get two loans together, then you need to plan properly because you have to pay two EMI’s together now. So you should plan your expenditure according to this now.
• One more advantage of getting a home loan is getting tax benefits and a home loan.

So you are advised to prefer a home loan over a personal loan to buy a house. You can easily apply for a home loan online. You will easily b able to get a home loan at easy rates of interest.

Read Other Related Articles:

Special Note: An individual must examine the whole EMI amount payable to the lender with the Personal loan EMI calculator.