Home Loan Vs Personal Loan – Know The Difference

Home Loan vs Personal Loan. What is the Difference?

A loan plays an important role in bridging the gap between people and their immediate need for money.

But with different types of loans available, it’s important to make the right choice. For example, if you want to purchase a new television, an instant personal loan is the perfect choice. But if you’re planning to buy a new house, you will need to take a home renovation loan.

 Home loan or personal loan, which is better for you? Keep reading to find out.  

What is a Personal Loan?

A personal loan is the money you can borrow from a lender to meet any kind of expenses like travelling, online courses, shopping etc. You don’t have to provide any collateral against these loans because usually they’re unsecured. 

What is a Home Loan?

A home loan or house loan is the money you can borrow from a lender to buy a house or property. Since this is a secured loan, you will have to provide collateral against the loan. Usually, lenders keep the house you purchase as security against the loan.  

Home Loan VS Personal Loan: Characteristics

CharacteristicPersonal LoanHome Loan
Loan AmountCan range between ₹1000 to ₹50 lakhs, depending on the lenderYou can get home loans up to ₹15 crores from different banks or NBFCs in India
Interest RateCan vary between 8.75% p.a. and 49.5% p.a.Can vary between 8.75% p.a. and 15% p.a.
CollateralIt depends on whether you’re taking a secured or unsecured loanThe property you purchase using the home loan is considered collateral.
Penalty ChargesPenal interest and late feesApart from penalty charges, the lender might seize your collateral
Repayment PeriodUp to 60 monthsUp to 30 years

Also Read : What is a Personal Loan? Definition, Types & How Do They Work?

Home Loan vs Personal Loan: Things you Need to Know

There are many differentiating factors between personal loans and home loans. And understanding the key differences can help you choose a loan that fits your needs.

Here is everything you need to know about the two:

Home Loan

1) Collateral

Home loans are secured loans. You have to provide your home as security against the money you borrow. If you’re unable to repay the loan, then the lender can seize the house you provided as security.

2) Loan Amount

Home loans are big-ticket loans which can range anything between ₹20 lakhs to ₹15 crores. The highest possible loan amount depends on the lender.

3) Tenure

Since home loans are big-ticket loans, they have a long repayment tenure. Depending on the lender, you can choose a loan tenure of up to 30 years.

4) EMI Payments

You will have to pay back your home loan in instalments every month in the form of EMIs. Since home loans have a long loan tenure, you need to plan your finances for a longer term.  

5) Processing Time

It takes longer to process a home loan as compared to a personal loan due to a longer application process and document requirements. Once your home loan is approved, you would receive the amount between a few days to a few weeks, depending on the lender.

6) Interest Rates

Home loans are secured loans. Because of this, the interest rate charged on them is comparatively lower than personal loans. In India, the interest rate on home loans can start at as low as 8.5% p.a.

Personal Loan

1) Collateral

Most personal loans are unsecured loans. This means you don’t have to provide any assets as security to take a loan.

2) Loan Amount

Personal loans are comparatively smaller ticket loans that can range anything between ₹1000 to ₹50 lakhs. The eligibility for the loan depends on factors like your credit score, past repayment behaviour and credit report.


Personal loans are usually small-ticket and unsecured loans. This means they have a comparatively shorter repayment tenure. Depending on the lender, your loan tenure can range from 3 to 60 months.

EMI Payments

Personal loans have a shorter loan tenure. This means, on average, you will have to plan your finances for a short to medium term.

Processing Time

Personal loans take less time to process. If you’re applying for an instant personal loan, you can complete your application and receive the money on the same day.

Want a super-fast loan? With Zype, you can get approved for a personal loan in less than 60 seconds and receive the amount within 24 hours.

Interest Rate

Personal loans are unsecured loans. Because of this, personal loans have a higher interest charge on them. Depending on your credit profile, you will be charged an interest rate that ranges from 8.75% p.a. and 49.5% p.a.

Also Read: Secured vs. Unsecured Loan: What is the Difference?

Personal Loan or Home Loan – Which is Better?

Before choosing between a personal loan and a home loan, it’s important to evaluate your needs. This is because both loans serve very different purposes.

If you want to purchase a house or property, then a home loan is the right choice. You can get a higher loan amount at lower interest rates and EMIs.

But if you want instant access to money, a personal loan is a better option for you. With an easy application, instant approval, and fast disbursal, you can get the money you need very quickly.  

Home Loan vs Personal Loan: Interest Rates

The interest rate you’re charged on a personal loan depends on your credit score and personal loan repayment history. Between home loans vs personal loans, interest rates offered on home loans are comparatively lower. In India, you can get a home loan starting at just an 8.5% interest rate.

Usually, personal loans are unsecured loans. This is why the interest rates offered on personal loans are higher. In India, you can get a personal loan ranging between 8.75% to 49.5%. Want a personal loan at an affordable interest rate? Download the Zype app and get instant loans starting at just a 1.5% interest rate (per month).


Both these loans have very different loan amounts, interest rates, and processing times.

But now that you know these differences, you can evaluate your requirements to make an informed decision.

Frequently Asked Question

Can We Take Personal Loan For 15 Years?
No, personal loans have a shorter repayment tenure. The maximum number of EMIs on your loan is up to 60 months.
Do I Need Good Credit for Both Personal Loans and Home Loans?
While many lenders offer personal loans and home loans to those customers who are new to credit or have a score below 700, a good credit score can get you a high loan amount at a low-interest rate.
Can You Take a Personal Loan To Pay Down Payment?
Yes, you can. You can use your personal loan anywhere you like because they are usually unsecured loans.
When should I Choose a Home Loan Over a Personal Loan?
If you need money to buy a house or a property, choose a home loan. But if you have money very quickly for things like a down-payment on your house, wedding expenses, education fees, etc. it is better to choose a personal loan.
What Factors Should I Consider When Deciding Between a Personal Loan and a Home Loan?
The most important factor you should consider when deciding between a personal loan and a home loan is the purpose of your loan. Other than that, there are also factors like the interest rate, loan amount, EMIs etc. that you should consider.

Download Zype App​