Anytime a situation can occur where you are in need of urgent financing. But the main dilemma you may face is the option to choose between a personal loan vs mortgage loan. Almost all the banks and NBFCs provide both, personal loans as well as mortgage loans.
Let us see a detailed comparison on a Personal Loan vs Mortgage Loan:
A personal loan is an unsecured loan that allows us to borrow money from banks at a rate of interest which is generally higher than the other types of loans. It is an unsecured loan as the borrower need not deposit any mortgage or collateral security to the bank as a guarantee for the loan amount sanctioned. As the name suggests, you can utilize the loan amount for any purpose you may like, there are no end-use restrictions on it.
A Mortgage Loan is a type of secured loan in which you pledge your property to the bank or the lender as a security and then you get a mortgage loan or a loan against property. Similar to a personal loan, you can use the loan amount through a mortgage loan as per your need and it is not restricted to any specific purpose.
Personal Loan vs Mortgage Loan
The essential differences between a personal loan and a mortgage loan are listed down below:
- Processing Time: If we compare the processing time of a personal loan or a mortgage loan we find that a personal loan processes fast. The reason after this is in a personal loan you don’t pledge any of your property. It is given on the basis of your income and credit history. If your credit score is good and the profile is decent then you will get a personal loan within two days. But in the case of a mortgage loan, it is the opposite because the document verification of the property and other details is time taking process.
- Rate of Interest: A Personal Loan Interest Rate is generally higher than a mortgage loan’s rate of interest as in a personal loan, there is no guarantee assured to the bank in the form of mortgage or collateral, unlike mortgage loan. Mortgage Loans can be availed at an affordable rate of interest.
- Tenure: The time period to return a personal loan is short as compared to a mortgage loan. A personal loan can be availed for 5 years. On the other hand, mortgage loans are for a longer period of time.
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Leading Personal Loan Providers in India:
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