Difference Between a Personal Loan & a Home Loan

A home equity loan or extra payments on your mortgage can be used to finance things like a renovation or a large purchase. In this useful credit repair Australia article, we will explore the differences between a personal loan and a home loan. Continue reading to find out more and learn the difference between the two!

When you take out a home loan, the interest rate is lower than it would be for a personal loan. You also have smaller monthly instalments and more time to pay off the total debt. But even with a lower interest rate, some people are surprised by how much they end up paying in interest over 20 or 30 years.

Before making your decision, you should calculate how much additional interest you’ll accrue if you choose to redraw from a home loan. In most cases, home loans have lower interest rates than personal loans. Additionally, because they tend to last significantly longer than personal ones, this will save you money in the long term.

Although you have to repay home loans over a longer period of time, the monthly payments are usually smaller. But keep in mind that if you get a loan with a lower interest rate, you’ll end up paying less money overall.

Although home loan and personal loan interest rates are both vital to investigate, how soon you want to be out of debt is another consideration. A home loan takes 20 – 30 years to repay while a personal loan’s repayment timeline falls between five and seven years. Therefore, if your goal is pay off your debts more quickly, the latter may be a better option for you.

The loan you select should be based on your personal circumstances and needs. Be sure that the repayment plan for whichever loan you choose—home orpersonal—can fit within your budget to avoid any future money troubles.

If you have been declined credit, or are finding it difficult to get approved for a loan, then contact the credit repair experts at Clear Credit Solutions today.

We can help to remove negative listings from your credit file, such as defaults, court judgements and fraudulent enquiries, which will give you a better chance of being approved for a loan. Our credit repair Australia team of experts know how to improve your credit rating quickly and easily so that you can access the finance you need.