Can I Take Home Loan and Personal Loan Together in India?

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Imagine this: You’re eyeing that dream home you always wanted to buy, but at the same time, there’s an urgent need for funds – maybe your daughter’s wedding is around the corner, or there’s an unforeseen medical expense. This is where many Indians find themselves in a quandary – managing the need for a home loan while already handling or considering a personal loan. It’s like walking a tightrope with two heavyweights in each hand.

In a country where the financial terrain is as diverse and dynamic as its culture, making sense of the possibility and repercussions of handling both a home loan and a personal loan together is more than just number-crunching. Through this blog, we’ll journey together through the alleyways of such financial decisions, shedding light on the must-knows like eligibility criteria, paperwork essentials, and how to strategically balance these two financial commitments.

Can I Take Home Loan and Personal Loan Together?

The short and long answer to this question is, yes, you can definitely take out a personal loan and a home loan at the same time. There’s no rule limiting the number of loans you can have concurrently. Even though it might seem like a big financial commitment, juggling multiple loans can be manageable.

Here’s a common situation: people often get a personal loan along with a home loan for the same purpose. According to the Reserve Bank of India’s guidelines, when you apply for a home loan, you can only borrow up to 90% of the property’s value. So, for instance, if you’re buying a house worth INR 3 crores, the maximum home loan you can get is INR 2.7 crores. The rest, INR 30 lakhs in this case, is what you need to pay as a down payment. Since this amount can be quite large for many, taking a personal loan can be a helpful way to cover this down payment.

When Should I Consider Personal Loans and Home Loans Together?

Opting for both loans concurrently should be a well-thought-out decision. Scenarios where it might make sense include:

1. Funding immediate personal expenses (like a wedding or medical emergency) while purchasing a property.

2. When the personal loan offers a lower interest rate compared to other forms of unsecured lending.

3. If the home loan alone doesn’t cover all property-related expenses, a personal loan can fill the gap.

Also Read: I Need 30,000 Rupees Loan Urgently In a Day

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

If you are thinking of getting a home loan and a personal loan at the same time, here are some tips to make it work:

1. Maintain a Good Credit Score

Before applying for a personal loan while having a home loan, make sure you have a strong credit history. Banks look at your credit score to decide if you’re good at paying back loans. If you’re often late on your home loan payments, it might be hard to get a personal loan. A good credit score shows the bank you’re reliable.

2. Manage Your Debt-to-Income Ratio

When applying for a personal loan on top of a home loan, keep an eye on your debt-to-income ratio. For example, if you earn Rs 50,000 a month and your home loan payment is Rs 28,000, you can think about a personal loan if it doesn’t stretch your budget too thin. Remember, it’s riskier to miss payments on a home loan because you’ve put up property as collateral, unlike a personal loan.

3. Apply With Someone Else

Want to show the bank you can definitely payback? Apply with someone else, like a family member. When you apply together, the bank sees it as safer than just one person applying. For example, if you and your sibling want both a personal and a home loan, applying together makes the bank more confident.

4. Choose a Shorter Time for a Personal Loan

Home loans usually last a long time. So, it’s a good idea to choose a shorter time to pay back your personal loan. This way, you won’t be stuck with long-term payments for both loans, making it easier to manage your finances.

Also Read: I Need ₹5000 Rupees Loan Urgently: Quick Guide

Can I Get a Home Loan If I have a Personal Loan?

Yes, having a personal loan does not automatically disqualify you from getting a home loan. The key is your repayment capacity. Lenders evaluate your total EMI obligations, and if the additional home loan EMI fits within the acceptable limits of your income, the loan can be sanctioned.

Calculate Your Personal Loan EMI 

Eligibility Criteria for Availing a Personal Loan in Addition to the Home Loan

1. Stable Income: A consistent and adequate income stream is essential.
2. Credit Score: A high credit score indicates creditworthiness and repayment ability.
3. Existing Debt Burden: Lower existing debts increase the chance of approval.
4. Employment Stability: A steady job, especially in a reputed organization, is favorable.

Document Criteria for Availing a Personal Loan in Addition to the Home Loan

1. Identity Proof: PAN card, Aadhaar card, Voter ID, etc.
2. Income Proof: Latest salary slips, bank statements, and IT returns.
3. Residence Proof: Utility bills, rental agreement, or passport.
4. Property Documents: For the home loan, including the sale deed, NOC, and others as per the lender’s requirement.

Opting for both a home loan and a personal loan in India can indeed work out, but it’s like balancing your monthly household budget – it needs attention and smart planning. Just as you carefully plan your monthly expenses to ensure everything runs smoothly, you need to keep a close eye on your financial health when juggling these loans. Make sure your credit score is in good shape, much like keeping track of your regular bills, and ensure your income is steady and reliable. Also, be mindful of the extra interest you’ll be paying – it’s an important part of your financial ‘grocery list’. Talking to a financial advisor can be as helpful as seeking advice from a wise family member when making big budget decisions. Ultimately, it’s all about managing your finances with discipline and care, just like you manage your household needs.

Liked what you read? Found it helpful? Let us know in the comments and feel free to share this with someone who might benefit from this advice – it could be the financial guidance they are looking for!

FAQs:

1. Does Having a Personal Loan Impact the Chances of Getting Approved for a Home Loan?

Certainly; if you’ve previously taken out a personal loan that has increased your debt-to-income ratio significantly, it could negatively influence your ability to qualify for a home loan. Lenders may reassess your capability to manage additional loan payments when you’re already committed to other debts. Generally, a higher debt-to-income ratio can decrease the likelihood of being granted a home loan.

2. Is it Possible to Have Two Loans at the Same Time?

Yes, it is possible to hold two loans simultaneously.

3. Is it Feasible to Secure Home Loans from Multiple Banks?

Yes, indeed, one can obtain home loans from two different banks, provided they meet the necessary conditions and eligibility requirements set by the lenders.

4. Is it Possible to Take out an Additional Loan on Top of An Existing One?

Yes, securing another loan while having one is possible, though it becomes more challenging as your debt-to-income ratio increases with each new loan.