Personal home finance is helping people to live their dreams. Making a home needs a good amount of money and this is quite normal that sometimes, a person finds it hard to afford such a huge expenditure at a time. In such a situation personal home loans are always there to finance the plan.
Now these loans are basically of two kinds, secured and unsecured. Before choosing a particular type of loan, one should keep in mind the exact amount it is carrying and also if that amount is enough to complete the construction in todays highly expensive market.
Now, before taking a personal home loan, one should understand that unsecured loans provide medium range amounts because of the risk factors factors. It is also a short term loan where the re-payment duration is short and also the interest rates are little higher. The re-payment duration may be something from a few months to a maximum of five years.
But, because these loans do not need any security or collateral, these are very flexible and easily provide funds. On the other hand, there are secured loans also known as equity loans. These loans can provide huge amounts to fund a huge project, and the interest rates are also low in comparison to the unsecured loan.
The loan term may stretch for 15-20 years, which can make the re-payment easier. At the same time, these loans need some kind of security against which the money could be lent. The processing time of these type of loans are quite long and the process is also a bit complex.
The borrower can choose his own plan, but should always remember that,short term loans, because of the high interest rate, costs more and these loans should be preferred for small projects. The equity loans or secured loans should be preferred for huge projects like home making, because the cost of such loan is low.
Personal home finance generally comes in the above mentioned two basic types, but sometimes there are slight adjustments done by the finance companies, like providing free insurance cover, adjustable interest rates (conditional), extended term (conditional), part fixed, part floating rate (conditional), etc.
Last Updated on : 1st August 2013