Is it possible to have a home using a personal loan?
You think it’s time to give yourself a home. Logically, you have to take out a mortgage, but you don’t even have the equity for it. The idea of using a personal loan comes to mind. Is it possible ?
A limited threshold for personal loans
People who are tempted to use the personal loan to acquire their home are not uncommon. This is explained by the simplicity of its procedure compared to that of mortgage. What is more, this type of consumer credit does not need proof of use. However, the first block is in the ceiling amount authorized by law. It is limited to 75,000 dollars, a sum far from sufficient to acquire real estate, whether you plan to buy or build it.
However, you plan to use the personal loan, if only to partially finance the project. Would there be risks in this case? The answer is yes.
3 reasons to prefer mortgage over personal loan
The interest rate on a personal loan is much higher than that of a mortgage. It is almost at the limit of the rate of wear. The reason is simple: banks are more at risk by lending money without knowing its use.
To take out a personal loan is to allow yourself freedom, and in freedom, you run more risk of defaulting, while the mortgage is well supervised. This is supplemented by several means of securing your property purchase, such as insurance that can cover loss of employment, disability, and even death. You can even use the resale guarantee for your property or also the mobility guarantee.
It is not only the maximum amount that is limited for the personal loan, the duration of repayment is also. The maximum duration is 7 years. Suppose you are going to build or even buy a house in 7 years. Not only would you be forced to take steps quickly, but you would have to pay large monthly payments given the fairly close maturity compared to that of the mortgage which repayment can be spread over 20 or even 25 years. You would therefore be more comfortable in managing your budget with mortgage loans.
Personal loans for real estate
The question then arises: if personal credit is not suitable for the acquisition of a house, what is the purpose of personal credit for real estate that often offer credit organizations? Here is the answer :
Personal loans for real estate purposes or personal loans for real estate purposes are intended to finance renovation works, such as enlargement or exterior fittings, or urgent works, or even interior decoration. It can, ultimately, finance the purchase of building land, provided that this property has a residual value.