In the dynamic landscape of today's world, anyone may encounter situations where financial assistance becomes essential, whether for unplanned expenses or to fulfil personal aspirations. In such situations, many individuals find themselves at a crossroad between personal loans and mortgage loans. Let us explore the key differences between personal loans and mortgage loans, helping you make an informed decision based on your financial needs and goals.
Personal loans
A personal loan is an unsecured financial product, which means no collateral is required for it. With personal loans, you can borrow a fixed amount from a lender that can be repaid in small monthly instalments over a predetermined period.
Mortgage loans
A mortgage loan is a secured loan in which you provide an asset or a property as a security to the lender and get funds against it. With a mortgage loan, you get the loan amount basis the value of your property.
Mortgage loans vs personal loans
Interest rates: Mortgage loans come with lower interest rates because they are secured loans. However, personal loans come with higher interest rates as there is no collateral involved.
Loan amount: With mortgage loans, you can get funds based on the valuation of the property you pledge with your lender. However, in the case of a personal loan, you can borrow a loan based on the eligibility criteria, which include your income and credit score.
Documentation: Mortgage loans usually require lengthy paperwork as you need to submit a lot of documents related to your pledged asset. However, personal loans come with a very straightforward process and require just a few documents. For example, Bajaj Finance offers personal loans that come with simple eligibility criteria and require minimal documents.
Processing time: The processing time for personal loans and mortgage loans varies significantly. Personal loans typically have a quicker approval process. These loans are unsecured, requiring less documentation and assessment. In contrast, mortgage loans involve a more extensive process due to the collateralised nature of the loan. Mortgage approval may take longer as it involves a thorough evaluation of the borrower's creditworthiness, property appraisal, and legal considerations.
When to opt for a mortgage loan?
You can choose a mortgage loan if you want funds at lower interest rates and do not need them urgently.
When to opt for a personal loan?
You can choose a personal loan if you need funds urgently and do not want to go through the lengthy process.
Mortgage loans or a personal loan – which is better?
Ultimately, the decision between a mortgage loan and a personal loan hinges on your specific requirements. It is crucial to evaluate the amount of funds needed, your ability to repay, and more. Based on these considerations, you can select the credit option that aligns best with your financial needs.
Bajaj Finance offers personal loans that come with simple eligibility criteria and minimal documents. With features like the flexible repayment tenure option, you can spread the loan amount over a period of up to 96 months and repay easily in small monthly instalments.
Apply for our Personal Loan.
