Is it possible to have a home and a personal loan at the same time when you already have an active personal loan but must also secure financing for a home? Yes, it is the answer. There is no restriction on how many loans a person can take out at once, thus a borrower can combine several loans.
The management of several loan accounts’ loan repayment is the most important responsibility. Taking up a personal loan and a home loan at the same time carries significant risk. It is crucial to have a well-structured financial plan. Which should cover timely EMI payments as well as other important financial responsibilities.
Additionally, combining a personal loan with a home loan might be highly beneficial. But a borrower must first demonstrate their creditworthiness to the lender.
What is a personal loan?
This sort of loan has a flexible use policy and is unsecured. Application for a personal loan is easy. Since the loan is unsecured, the lender does not require security to approve it. To distribute the personal loan amount, nonetheless, it takes your creditworthiness into account. Based on your monthly income, the lender will also determine if you are at least minimally eligible for a personal loan.
What is a home loan?
A home loan is a loan given by a bank or other financial institution for the purchase of a residence, including a primary residence, a secondary residence, or an investment residence, as opposed to a loan for the purchase of commercial or industrial property. In a loan for a home, the owner of the property (the borrower) transfers the title to the lender with the understanding that the title would be returned to the owner when the last loan payment has been completed and all other conditions of the loan have been satisfied.
The following are some points to consider when applying for both loans:
Good Credit Score:
Lenders look at your credit score when you ask for a loan to see if you would be able to repay the amount. A borrower’s history of timely loan repayment is reflected in their credit score. You can get approved for both loans at the same time if you have a credit score of 700 or higher.
Debt to Income ratio:
You are in a worse mood if your debt to income ratio is higher. It implies that you are a high-risk applicant, which may reduce your chances of being approved for both loans at the same time. Lenders are interested in your income and the proportion that goes toward paying off debt. Ideally, you should spend less than half of your income on debt repayments (including loan EMIs and other financial obligations).
Apply for a flexible-term personal loan:
Look for a personal loan with flexible payback terms to effectively handle both loans. Flexible loans enable you to take out money from the total loan amount in increments according to your needs. Additionally, you will only be paying interest on the amount you withdrew. Additionally, prepayment options are available on loans with variable terms, which lessens the pressure of a demanding EMI schedule.
Co-apply to show repayment ability:
This is one method of demonstrating to lenders your ability to repay loans. You and your spouse or parents are both eligible to apply. When the income of multiple people is demonstrated, lenders are given strong assurance. Additionally, it will raise your chances of receiving approval for both a personal and a home loan at the same time.
Therefore, you are allowed to take out personal and home loans at the same time. But you must have a respectable credit history and strong payback capacity. You can avoid the trouble of applying for a home loan and a personal loan at the same time by strictly adhering to the guidelines mentioned above.