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Anishka Bhadly, working at Loansjagat, is a content writer with a finance and business background. She has completed her bachelor's degree with a specialisation in finance and is currently pursuing an MBA in the finance field too. The knowledge she has gained from her studies and experience working with EdTech companies helped her combine theoretical knowledge with practical industry insight. Her expertise lies in creating well-researched, informative, and reader-friendly content in various banking, personal finance, loans, insurance, and investment-related topics.
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A home loan does not necessarily prevent you from getting a personal loan. You can apply for one while continuing your home loan repayments, although the lender will assess your ability to handle the additional EMIs. Your monthly income, home loan EMI, credit score, repayment history, and other financial obligations will affect the decision of the personal loan lender. For example, if your home loan already accounts for a significant portion of your income, the lender may decrease the amount of personal loan you are eligible to receive. Conversely, having a good income and credit score and sufficient repayment capability will increase your chances of getting an additional personal loan.
Key Takeaways:
Buying a house may drain a major portion of your savings, especially with furnishings, interior design, and other related expenses. Costs concerning renovation or repair work and painting tend to crop up immediately after one moves into a new house, leaving little or no money for such expenditures. A home loan top-up facility can be availed to meet such expenses, though the lending institution may ask you to clear a certain number of EMIs before they consider a top-up application. Till then, a personal loan can be taken to tide over the time being. While there is no restriction on having both loans, one must keep in mind the CIBIL score, EMIs of the existing loan, and repayment capacity.
You can take a home loan and a personal loan together. But the lending institution will assess your financial credentials before sanctioning the second loan. Here are the factors that the lenders will consider before giving you a personal loan with an existing home loan:
For example, say you earn ₹100,000 per month and have an EMI of ₹35,000 for repaying a home loan. If the bank takes into consideration your total EMI liability while sanctioning a personal loan, a personal loan EMI of ₹10,000 would mean ₹45,000 being paid out as EMIs every month, or 45% of your income. The bank has to be comfortable with this number according to their eligibility criteria.
Before applying for a personal loan against your home loan, make sure that the combined EMI does not exceed your financial capacity.
One of the simplest ways to manage both loans together without getting overburdened is by keeping a few things in mind:
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So, basically, you can take two loans, but you must be wise enough to understand that you should only borrow what you can repay easily and not take undue advantage of the availability of credit.
Taking a personal loan along with a home loan is possible, but you need to ensure that your finances can support one more EMI or monthly payment. If you have a good credit history, you can also think about personal loans, as they are unsecured loans. But at the same time, you need to understand that personal loans are expensive, so calculate all your dues and cross-check them with your FOIR (Financial Obligation to Income Ratio). So, if you are confident that your income will support one more loan, then you can go ahead and apply for a personal loan. However, if you are doubtful about your ability to pay, it is better to postpone taking a personal loan and think of other cost-effective options.
Can I take a personal loan while paying a home loan?
Yes, you can take a personal loan while you are paying off a home loan. The lender will consider your income, credit score, current Equated Monthly Installment (EMI) and other factors before approving the loan.
Does a home loan affect the eligibility for a personal loan?
When processing an application for a personal loan, the income and credit score of the applicant are taken into account. A large portion of the applicant's income goes to the payment of their home loan, which reduces the amount of money available for the new personal loan.
Is a credit score needed to have a home loan and a personal loan?
There is no specific credit score needed. However, the higher your credit score is (typically 750+), the better your odds are of being approved for a loan with a competitive interest rate.
Do banks check whether an applicant has any other loans when processing a personal loan application?
Banks and other lending institutions take into account all of the applicant's financial obligations. Therefore, they will review the list of an applicant's currently paid loans and credit cards.
Can I get a personal loan if I am currently paying off a home loan with a big EMI?
It depends on your income and financial situation. Having a personal loan and a home loan is a risky and costly endeavor. If you have enough money on the side to make the EMI payments, you may be able to get a personal loan.
Is it true that a personal loan may be costlier than a home loan?
Usually, personal loans tend to have a higher rate of interest since they are unsecured loans. So it is better to compare and evaluate the overall cost of interest before you apply for the loan.
Can I use a personal loan for home improvement or furniture purchases?
Yes, you can use a personal loan for the purpose of home improvement or furniture/renovation/painting or any other purpose as allowed by the lender.
Is it better to go for a personal loan or a home loan top-up?
It depends on the interest rates offered by the bank for both loans. Whereas, as a thumb rule, top-up loans on existing home loans normally offer a lower rate of interest than a personal loan, you need to check the eligibility criteria for a top-up loan in the first place.
Will availing multiple loans or multiple applications affect my CIBIL score?
Making multiple loan inquiries might impact the score in the short term, but you are likely to see a long-term benefit by using credit responsibly and making payments on time. The regular or overdue payment of EMIs can also impact your CIBIL score.
How can I manage the two loans without much hassle?
Calculate your total monthly EMI outflow and make sure it does not exceed a certain percentage of your monthly income. Also, keep some emergency fund aside and try not to take any additional loans.
