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Loans have become significant financial instruments allowing individuals to meet their aspirations, ranging from medical emergencies, short-term cash flow gaps and building long-term assets like a home. Most financial institutions extend a wide range of financial products, such as personal loans, home loans and more to fulfil varied consumers’ requirements. 


Personal loans allow individuals to meet smaller goals, such as funding marriage and vacation, financing a child’s education, etc. On the other hand, the increasing home prices make home loan borrowing necessary. Hence, before opting for the right one, it is essential to understand the difference between a home loan vs personal loan.

Home Loan vs Personal Loan: Differences

To know the difference between home loan and personal loan, refer to the table below:

Differentiating factors

Home loan

Personal loan


A home loan is a secured variant, and lenders consider the borrower’s property as collateral which they plan to purchase

Personal loans do not require collateral.


The home loan tenure can range up to 18 years.

Personal loans are available for a period of up to 5 years.

Loan quantum

Often home loans come with a substantial amount. However, the amount will be sanctioned depending on the borrower’s income eligibility.

Personal loans come with small amounts to meet short-term cash requirements.

Tax benefits

Usually, home loans come with a significant tax benefit on both principal and interest payment

If the borrower chooses to prepay a certain portion of the loan amount, he/she will have no impact on the tax planning.

Apart from these, another significant difference between these two is the home loan vs personal loan interest rate. The former comes with an affordable interest rate owing to its secured nature, while the latter comes with a higher interest rate. 

Home Loan vs Personal Loan in a Nutshell

Here are some notable distinctions between home loan vs personal loan based on certain factors:

Distinguishing factors

Home loan

Personal loan




Interest rate

7.70%* onwards

10.49%* onwards

Loan amount

Up to Rs. 15 Crores*

Up to Rs. 50 Lakhs*

Processing fee

Up to 7% of the loan amount

Up to 4% of the loan amount

What is Home Loan

Financial institutions in the country extend home loans to eligible borrowers, helping them to make the home loan down payment and purchase their desired properties without exhausting their savings.

Purpose of Home Loan

Home loans help individuals in the following ways:

  • One of the most prevalent kinds of home loans is for acquiring a new or used property. Most financiers offer this kind of loan in varied configurations.

  • With the help of a home loan, individuals can build a new home rather than purchase a built one.

  • Financiers also offer home loans for home expansion that involve integrations of additional spaces, renovating existing structures, etc.

What is Personal Loan

This type of financing option does not require any high-end asset as collateral. Instead, it is entirely approved on the basis of the borrower’s creditworthiness and repayment ability.

Purpose of Personal Loan

Here are some of the significant purposes of a personal loan:

  • With the help of a personal loan, borrowers can fund marriage, meet the necessary wedding expenses, etc., per requirement.

  • By opting for a personal loan for travel purposes, borrowers can finance their trip expenses in any part of the world.

  • Also, borrowers can meet necessary medical expenses with the help of personal loans without exhausting their savings.


Besides understanding the difference between home loan vs personal loan, borrowers must know the features and benefits to plan their finances better. Moreover, before opting for any of these financing options, it is essential to assess one’s finance and repayment capacity to avoid complications in the long run.

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