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Home Loan VS Personal Loan

A home loan is a secured loan obtained from a financial institution and secured by property that is either owned or financed. You can get the best home loan in the market if you have a high income. The property in question is assessed to determine its current market value, and a proportion of that value is disbursed in the form of a loan, known as loan to value (LTV). Other variables, such as repayment capabilities and the need for the home loan, are considered before the amount is approved. The loan is repaid in equal monthly installments (EMIs) over a set period of time at a specified interest rate.

Personal loans, on the other hand, are unsecured loans that are granted by a bank without the use of collateral or a mortgage on land or property as security. Because a personal loan is an unsecured loan, the amount approved may be less than a home loan, thus personal loans are typically used for smaller financial needs.

Here are the some major points that you can consider to differentiate between a home loan and a personal loan – 


The type of loan is the most significant distinction between a personal loan and a house loan. A home loan is secured. In the event of a house loan, the property serves as collateral and can be confiscated by the bank or lending business if the debt is not paid back. Further, a personal loan is not secured. As a result, there is no necessity for collateral in the event of a personal loan.


Home loans are available with periods ranging from five to thirty years. The tenure of a home loan is higher because of the higher loan value.

Personal loans, on the other hand, can be taken out for a period of 12 to 60 months.

Interest Rates Issued

The interest rate you are offered is one of those important factors that an applicant takes into consideration on an initial basis. As the risk involved in home loan is high, the home loan is issued at a lower interest rate than a personal loan. Your lender may charge you a reduced interest rate as the home loan is secured in nature. 

Tax advantages

Another factor to consider is that personal loans do not provide tax advantages. You can deduct up to 1.5 lakh towards principal payments. You can also reduce up to 2 lakh towards interest repayment on home loans. Furthermore, these tax advantages are available for the duration of the home loan. Taking advantage of these tax breaks not only lowers your tax bill, but it also makes repayment more manageable. As a result, you should constantly evaluate the tax benefits associated with your loans before closing them.

Processing Time for the Loan

A personal loan, as previously stated, is an unsecured loan. Because lenders will not ask for any security, the processing time will be short. All they’ll do is assess your monthly income and credit score, which might result in your loan application being accepted in as little as a week.

However, the time taken to process a home loan is generally 15 to 30 days. This is because, before releasing the loan funds, the lender will verify the legitimacy of the property-related paperwork. 

The Bottom Line

One of the most significant factors to consider when finalizing a loan is the interest rate. However, you should not limit your search to interest rates and should consider other criteria as well. Other aspects that you cannot afford to overlook include the total borrowing cost and tax benefits. Remember that using a home loan EMI calculator and comparing and contrasting each of your loans can be beneficial.

I am a financial advisor/planner, I am dedicated to knowing about your personal issues that need a financial solution. Then we will build a financial plan to resolve your issues.

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