About Personal Finance, Banking, Mutual funds and Investments

How to Use Personal Loan For Buying Your Dream Home?

Finance Guru Speaks: A personal loan is one avenue you can explore when your home loan doesn’t spread far enough to meet the cost of your dream home, or when you want to renovate your place.

Personal Loan for Buying Your Home
Personal Loan for Buying Your Home

How can a personal loan get you a dream home?

Personal loans can be availed if you want to make up a deficit in your funds, to pay the cost of renovating the house you want to buy or the home you own.

Personal loans: Why should you opt for it?

A personal loan is an unsecured amount you can borrow, meaning you need not provide collateral for it. You can apply for such financing at banks where you are not yet a customer, provided you meet their criteria.

While these sort of loans can entail a higher rate of interest, they have certain advantages.

  • These loans are available to people who do not have any property or other collateral to offer as security. 
  • You can apply for this if all your assets, like your home and FDs, are tied up elsewhere.
  • These loans are offered for smaller amounts, usually from Rs.50,000 to Rs.10 lakhs or more, and the tenure is shorter, so you can pay off them off quickly.
  • It is easy to get a personal loan if you have a good credit history, that is if you regularly pay your additional debts, such as your credit card EMIs, on time.
  • Unlike home and automobile loans, the lender is not interested in what you need the loan for. So, once you get the funds, you can spend it on your wedding, your child’s education, home renovations, or anything else.
  • You need not provide details about the cost of renovations or repairs you’re intending to use the funds for.
  • There is generally much less documentation and paperwork involved in personal loans, and they are processed faster.

So, if you need more funds to meet the cost of renovating your dream home, apply for a personal loan online as it could prove to be a good solution, provided you keep in mind the higher interest rates.

How do you get a personal loan?

You can apply for a personal loan at any bank or NBFC. There are many financial market websites that provide a comparison of personal loan offers from several banks and finance institutions and they
also provide online EMI Calculator for calculating the monthly installment of loan. You can visit these sites, and compare offers to pick the most suitable one for you.

Banks are selective when sanctioning personal loans, so as to be satisfied with your ability to meet the EMIs. Lenders check your credit history through approved credit rating agencies like CIBIL.

If you have an excellent credit score, your application would more likely be approved. You can apply for personal loans online, as it involves less travel and hassle. The application process takes a few minutes and the amount is then disbursed to your savings account, within three days.

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