Home credit personal loans give you quick and easy access to money. They are useful when you need money to fulfil specific financial obligations. A loan up to Rs. 5 lakh is available at a low interest rate. Depending on the length of the repayment period, the interest charged on the loan ranges from 19% to 49%. The loan can be repaid in three years. Before we know more about it, let’s check out what a home credit personal loan is.
What is a Home Credit Personal Loan?
Home credit personal loans, also known as HEL loans (home equity loans), are unsecured loans against the value of your home. The bank agrees to give you money without any collateral because they know that if they don’t let you borrow it now, you will probably sell your house at a much lower price later.
5 Benefits of a Home Credit Personal Loan
Let us check out the 5 benefits of a home credit personal loan and how you can use yours wisely.
- Reduces debt and improves your credit score.
You can use a home equity loan to pay off debts such as credit card bills or auto loans. This will allow you to pay off your debts faster with a lower interest rate. Using a home credit personal loan to reduce debts will positively impact your credit score. The minimum credit score to qualify for a home credit personal loan is 620, and the amount of your loan will depend on your credit score.
If you want a higher loan amount, improve your credit score by paying off your debts and not taking on new credit.
- Helps with major purchases
If you have a family emergency, an expensive medical procedure, or a significant investment opportunity, you may need a huge sum of cash. This is where a home credit personal loan can help. Depending on the interest rate of your loan, you will want to make sure that you pay it back quickly. If you plan on using this loan to fund a major purchase, you will want to make sure you have a way to pay it back in a reasonable amount of time. The amount you owe on your loan will be higher due to interest rates.
- Build a residence and repair the house
When you purchase a new home or buy a new property, you may need to make repairs. You can use your home credit personal loan to repair or build a new residence. If you plan on using your home equity to build a residence or repair a property, you will have to have a contractor inspect the property before you sign the loan. Also, you will have to ensure that your home is worth more after completing the projects. The value of your home will increase due to repairs such as a new roof, new insulation, or updated appliances.
- Helps with college education
A home equity personal loan can help with the cost of a college education. You can use your home equity to pay for tuition, room and board, textbooks, or technology. A home credit personal loan can allow you to pay off any existing student loan debt. If you plan on using a home equity loan to fund your child’s education, you must pay off the loan quickly. Ensure the interest rate is low enough to pay back the loan in a reasonable amount of time. Go for lower interest rates. It can reduce your monthly payments and make it easier to pay off the debt.
- Pay off wealthy traditions
Several wealthy traditions are passed down through families through generations. Some traditions include paying for your children’s weddings and paying for college. If you want to help your children pay for their weddings, you can use a home equity personal loan to fund the wedding. If you plan on using your home equity loan to fund a wedding, you must pay off the loan quickly.
Things to consider before taking a home credit personal loan
When you apply for a home credit personal loan, you will be asked to provide a credit score and other information to qualify. The rating of your loan can help lenders determine the best personal loan rates and balance for your credit.
The following are some things that lenders will look for when determining the best interest rate for your loan:
- Several months on the property are required to qualify for a lower interest rate. You must have at least one month’s worth of rent on your property before applying for a low-interest loan. If you have an existing property, you must have owned it for at least one year before applying for the low-interest loan. If you bought the property with an existing mortgage, then it is not required that you own it before applying because the lender will only consider one month from when you acquired the property as part of your application process.
- Several years must remain on your mortgage to qualify for a lower interest rate. This is important because if you had an existing mortgage at the time of purchasing your home, then you are not required to own your home before applying. After all, there would be no way that they could deny or change their rates based on how long ago they purchased the house. However, if they change their rates by more than one year after purchasing the house, this can affect how much money they will allow in their payment plan and how much they will charge.
A home equity loan can be a good option if you have saved up enough money for a significant purchase or have significant debts. Using a home equity loan to fund a major purchase, build a new residence, or fund your child’s education is a short-term solution. You must pay off the loan quickly. The interest rate on a home equity personal loan will vary based on your credit score. The lower the interest rate, the higher your credit score. If you want to take out a home equity loan, visit Piramal Finance to get the best rate.