Can I Take a Home Loan and a Personal Loan Together?

Taking a loan can be a very crucial decision to make, and it should only be taken when one has a stable business or job that can help one repay the loan. People take various types of loans; some common loans are home loans and personal loans. However, people sometimes need both types of loans and have doubts, such as whether they can take a home loan and a personal loan together. The answer to this question is a simple yes, and it includes various conditions, which will be covered in the article.

What is a Personal Loan & Home Loan?

A Personal loan is a type of unsecured loan offered by banks and financial institutions for their consumption requirements, business needs, and domestic functions. Personal loans are often unsecured; there may be instances where banks require collateral, especially for larger loan amounts or borrowers with less-than-ideal credit histories. 

Apart from this, these loans are offered at higher rates as compared to any other kind of loan. Unlike personal loans, these loans are secured loans and require some security to be kept with the financial institution. 

It's common to take a home loan and a personal loan together. When one needs urgent funds to purchase a home and bear other personal expenses that can be borne by taking only personal loans. 

How to Take a Personal Loan and Home Loan Together?

People often wonder if they can convert a personal loan to a home loan,  but when one can take these together, then what is the need to convert them? To take these two together, one must first understand the difference between a home loan and a personal loan. 

The main difference between both of them is that a personal loan is taken to satisfy personal needs such as consumption needs, etc. A home loan is taken to specifically finance the purchase of a home. This section of the article discusses the process of getting both of them together.

Keep a Decent Credit Score

A credit score is a score that signifies your credit repayment ability in the past. Reputed lenders ask for this score to be more than 750 to offer you further credit. This score will always be improved by paying off your existing credits and this will improve your chances of getting higher amounts of loans. 

Apart from this, it also helps to acquire loans at lower interest rates, which would not have been possible otherwise. So, if one needs both a home loan and a personal loan together, they need a decent credit score.

Maintain a Manageable Debt-to-Income Ratio

Before providing any type of loan, a lender checks a borrower's repayment ability with the income that they earn and their credit history. Due to this, a lender may not provide an additional loan if the credit history is not up to the mark. 

This is why they check the debt-to-income ratio, which signifies the amount of debt one holds in comparison to the income that one earns. Therefore, one must only spend 50% of their monthly income on repaying the loan.

Secure a Secondary Loan

If one has a home loan, taking another loan can be a burden. This is why, before taking one, a person must check their debt-to-income ratio and credit score, which must be favourable. 

Before taking a personal loan,  one must choose their tenure, which can be checked by an EMI calculator and future instalments. This will help one know the amount one needs for every month to be used as an installment of a loan. 

Apply with a Co-applicant to improve Repayment Capabilities

When one applies with a co-applicant, it shows banks that the person has stronger repayment capabilities. Lenders become more confident by checking your repayment ability and providing you with higher amounts of loans with ease. 

Documentation Required to Apply for Home and Personal Loan Together

When comparing a personal loan vs. a home loan, one must also check the documentation required to apply for the loan. This helps in the quick and easy approval of loans and getting the amount in your bank account quickly. The following is the breakdown of common documents that lenders ask for when providing such loans:

• Loan Application Form: This application form may ask for details such as the amount of loan required by the person, the tenure for which they want the loan, etc.
• Identity Proof: For these proofs, one needs to submit their Aadhar card, PAN card, passport, driving license, or voter ID. 
• Income Proof: This could be one’s salary slips if they’re working in a job or a profit & loss statement if one is doing business. 
• Address Proof: One also needs to provide proof of address, which can include documents like utility bills, rent agreements, bank statements, and property tax receipts. 
• Property Documents: This includes documents like a sale deed or property title deed, property registration document, NOC from the property builder, and property tax receipts.
• Credit Report: A credit report is required by the lender to confirm the borrowers’ repayment ability. 
• Photographs: It helps lenders cross-verify their identity when providing loans.
• Employment Details: Lenders ask for the borrower's employment details to ensure that they’re working somewhere. This employment should be from at least the past 3 years. 

Conclusion

To secure a home and personal loan together, one needs to take care of some essential documentation and the process to apply for these loans. The process includes keeping a decent credit score, maintaining a debt-to-income ratio, securing a secondary loan, and applying with a co-applicant. Apart from this, the basic documentation required for the loans is identity, income and address proofs, employment details, and a credit report.

FAQs on Home Loans and Personal Loans 

1. Can you combine a home loan and a personal loan?

Yes, one can easily combine a home loan and a personal loan.

2. Can I take a home loan while having a personal loan?

Yes, one can take a home loan while having a personal loan.

3. Will a personal loan affect my home loan?

Yes, because a personal loan reduces your ability to borrow further money, which you could have easily acquired if you did not have a personal loan.

4. Can a personal loan be clubbed with a home loan?

Yes, a person can club a personal loan with a home loan. 

5. Can I take a home loan and a personal loan together if I have an existing loan?

Yes, you can take a home loan and a personal loan together even if you have an existing loan, provided your financial situation supports it.