There are a lot of funding options if you need money in an emergency. Depending on the requirement and situation you can choose an ideal loan product. To name a few, you can opt for a secured loan on your fixed deposit, shares, etc; or request for a Top Up on your existing Car Loan or Home Loan or Apply for a Personal Loan Instantly Online.
However, the decision to choose the ideal loan product is easier said than done for most of us. Let’s compare two of the most commonly chosen quick loan options- Personal Loan and Home Loan Top Up and find out how to choose the best option among the two.
When you need money in an emergency, a fresh Personal Loan is the best option available to you. The approval process is fast. Usually, you get the funds in your account within 72 hours. It is not the case with the Top-Up Home Loans. The banks have to follow a set procedure. The valuation of the property is essential to ensure the coverage of both the Home Loan and the Top-Up Home Loan. There are other formalities like an extension of a mortgage that can take time.
Personal Loans are better when you have short-term needs. If you have a higher requirement like marriage expenses, educational expenses, medical emergencies, and so on, the Home Loan Top-Up is a preferred choice. You can mobilise more funds with an extended repayment schedule.
The Home Loan Top-Up is better than a fresh Personal Loan when you consider the rate of interest. The rate of interest on a Personal Loan can be as high as 20% per annum whereas the Home Loan top-up interest rates compare favourably with the regular Home Loan product.
The Home Loan Top-Up product has an extended repayment period. Therefore, the EMI (Equated Monthly Instalment) component is lower as compared to the Personal Loan. It leaves you with a higher disposable income on your hands.
The lower EMI on the Home Loan Top-Up product ensures you have higher eligibility subject to the value of the property available after considering the requirement for the Home Loan. Secondly, you need not have a credit score in the range of 700 or above to Avail a Home Loan Top-Up. Banks know your credit history because you have a Home Loan with them.
The documentation formalities in a Personal Loan are minimal whereas it is not so in the case of the Home Loan top-up facility.
Usually, Personal Loans require a guarantor. It is not the case with a Home Loan top-up facility.
When you opt for a Home Loan top-up facility, you have to approach the bank where you maintain the Home Loan account. You do not have any other choice. You can transfer your Home Loan to another bank and take a top-up. However, that is a lengthy and expensive procedure. At the same time, you have all the leading banks such as PNB Bank offering attractive Top-Up Home Loan offers. On the other hand, you have a variety of options for Availing a Personal Loan. You can choose your bank or NBFC (Non-Banking Financial Company) from a large pool of resources.
Both Personal Loans and Top-ups are equally beneficial. Hence evaluate your needs thoroughly, and opt for the one that is more close to meeting your needs.
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