Yes, you can take a home loan and a personal loan together, as there is no legal restriction on holding multiple loans at the same time. Many borrowers choose this option to manage additional costs such as down payments, registration fees, home interiors, or unexpected expenses. However, lenders will carefully evaluate your credit score, income stability, and debt-to-income ratio to ensure you can comfortably repay both EMIs without financial strain. Proper planning is essential before committing to dual loan obligations.
Why Many Homebuyers Combine a Personal Loan with a Home Loan
Taking both a home loan and a personal loan has become common, especially among first-time homebuyers or those buying in high-cost areas. Here are some reasons why:
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Handling Extra Expenses
Home loans generally cover 80% to 90% of the property’s cost, but not the extras. You’ll still need to pay stamp duty, registration charges, brokerage fees, and interior work. Personal loans can help cover these costs without dipping into your savings.
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Bridging the Down Payment
Buyers usually have to arrange 10% to 20% of the property cost upfront. A personal loan can be used to cover this gap, especially if your current savings fall short.
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Furnishing and Setup
After buying a house, setting it up quickly can be costly. Personal loans can fund essential items like furniture, appliances, minor repairs, or painting so the home becomes livable faster.
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Affording a Better Property
Sometimes buyers stretch their budget to buy a better or bigger home. While the home loan covers the major cost, a personal loan gives the additional push to make it happen.
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Quick and Flexible Support
Personal loans are easier to get and disburse quickly. If you face any surprise costs during the home-buying process, this quick funding can help you manage them without delays.
Factors You Should Think About First
Before applying for both loans, consider these things:
- Credit Score: A good score increases your chances of approval and lowers your interest rate.
- Income Stability: Steady income is important to handle two EMIs comfortably.
- Debt-to-Income Ratio: Lenders will assess how much of your income is already going into debt payments.
- Loan Terms and Rates: Compare tenure, interest rates, and flexibility of repayment for both loans.
Managing Two Loans at Once: Risks and How to Avoid Them
Here's a closer look at some of the common risks involved in taking two loans at once and simple ways to avoid them.
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High Monthly EMIs
The Risk:
When you have two loans running together, the combined EMIs can take up a big chunk of your salary. If your income doesn't support it, you may end up with little money left for other needs or emergencies.
How to Handle It:
Plan your monthly budget carefully. Before taking the second loan, calculate your total EMI burden and make sure it's within 40–50% of your monthly income. Prioritise loan repayments, and avoid any extra spending that could disrupt your financial flow.
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Risk of Default
The Risk:
If your income drops or an emergency comes up, you might find it hard to pay both loans. This could lead to a default, which will hurt your credit score and limit your chances of getting future loans.
How to Handle It:
Build and maintain an emergency fund that can cover at least 3 to 6 months of your EMIs. This will act as your safety net during financial challenges and give you enough time to recover without missing payments.
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Financial Stress
The Risk:
Juggling multiple loans can take a toll on your mental well-being, especially if your income is stretched too thin. Constant worry about payments can affect both your peace of mind and your productivity.
How to Handle It:
Track your finances every month. Monitor your earnings, expenses, and EMI schedule regularly. Use budgeting apps or simple spreadsheets to keep things under control. If the pressure builds, consider debt consolidation or talk to your bank for restructuring options.
Comparison of Home Loan and Personal Loan
| Feature | Home Loan | Personal Loan |
|---|---|---|
| Purpose | Taken to purchase a new house, construct a property, or renovate an existing one. The usage is property-focused. | Can be used for multiple personal needs such as medical expenses, education, travel, weddings, or emergency funds. There are no strict usage restrictions. |
| Collateral Requirement | The property being purchased or financed acts as security. The lender holds rights over it until repayment is complete. | No collateral is required. It is an unsecured loan given based on income and credit profile. |
| Interest Rates | Interest rates are comparatively lower since the loan is backed by property. Rates usually fall in the range of eight to ten percent, depending on the lender and profile. | Interest rates are higher because there is no asset backing the loan. Rates can range from ten to twenty four percent based on credit score and lender policies. |
| Repayment Tenure | Offers long repayment periods, which can extend up to thirty years. This helps in reducing the monthly EMI burden. | Comes with shorter repayment durations, usually between one to five years, leading to higher EMIs. |
| Tax Benefits | Borrowers can claim tax deductions on principal and interest payments under Sections 80C and 24 of the Income Tax Act. | No tax deductions are available on personal loan repayments. |
| Loan Amount Availability | Lenders are willing to offer higher loan amounts since the property acts as security and repayment risk is lower. | Loan amounts are comparatively smaller and depend on income, repayment capacity, and credit score. |
| Approval Timeline | Approval takes longer because property verification, legal checks, and valuation processes are involved. | Approval is much faster. In many cases, funds are disbursed within a few hours or days. |
| Documentation | Requires detailed paperwork, including property documents, income proof, identity proof, and legal clearances. | Documentation is lighter. Basic KYC, income proof, and bank statements are usually sufficient. |
| Processing Charges | Processing fees are generally higher due to legal verification and administrative work involved. | Processing fees are lower compared to home loans. |
| Eligibility Criteria | Eligibility checks are stricter. Lenders closely examine income stability, credit history, and property details. | Eligibility norms are more relaxed. Approval mainly depends on credit score and repayment capacity. |
Need a little extra to make your new house feel like home?
Whether it's setting up your modular kitchen, getting that comfy sofa, or finishing your interiors just right, a Freo Personal Loan can help you cover all the furnishing costs without straining your budget.
Quick approval, flexible EMIs, and no collateral needed.
Closing Thoughts
Taking a home loan and a personal loan together is possible, and in many situations, it makes practical sense. It can help you manage upfront costs, set up your new home comfortably, and handle expenses that a home loan does not cover. But the convenience also comes with responsibility. Before committing, take a close look at your income, EMI capacity, and long-term financial stability. When planned carefully and managed with discipline, both loans can work side by side without putting unnecessary pressure on your finances.
