Gold Loan vs Home Loan
Explore the differences between a gold loan and a home loan and understand which one is the best fit for your financial situation. Read to know!
A gold loan and a home loan are secured loans, and if you are planning to buy a home, both loans can help you fulfill the purpose. The primary difference is that gold loans require you to pledge gold jewellery as collateral, whereas home loans require you to pledge the property you buy with the amount as collateral. Here are some added differences between a gold loan and a home loan.
What Is A Home Loan?Home loans are secured loans used to purchase or construct homes. A home loan has the following advantages:
• It is possible to get funds for up to 90% of the property's value. You can obtain a home loan of up to Rs 100 crores.
• You can take out a home loan with a repayment tenure of up to 30 years.
What Is A Gold Loan?A gold loan is a secured loan taken from a lender by pledging gold articles as collateral. A gold loan offers the following benefits:
• You can apply for a gold loan with minimal documents without proving your income.
• A gold loan does not require a credit score.
• Gold loans can be used for personal or business purposes, not specifically to buy a home.
The Difference Between A Home Loan vs A Gold LoanGold loan vs home loan differences include:
• Since lenders evaluate several documents for identity, income, residence, and property checks, a home loan takes more time to approve, sanction, and disburse funds. Contrarily, it will only take you a few days to get a gold loan.
• Home loans allow you to repay over a longer period, up to 30 years. NBFCs and banks offer gold loans for up to 36 months.
• A home loan has a long term and offers a higher loan amount, so its interest rate is lower than a gold loan.
• Processing fees on home loans range from nil to 0.5%. For gold loans, the maximum processing fee is 0.1%.
• EMIs are the primary option to repay home loans. However, gold loans offer multiple repayment options, such as bullet repayment, overdraft facility, and EMI.
• The eligibility criteria for a home loan are more rigid than those for a gold loan, which doesn't require income proof or CIBIL.
Home Loan or Gold Loan: Which Is Better?Home loans give you access to funds of up to 90% of the property's value, which you can use to purchase or construct a house with a repayment tenure of up to 30 years. On the other hand, gold loans do not have end-use restrictions or require income proof or CIBIL scores. You must choose between the two based on your needs.
Apply For A Loan With IIFL FinanceA gold loan can be used to meet various financial needs, whereas a home loan can fulfill your real estate needs. However, obtaining either loan requires choosing a reliable source. An IIFL Finance gold and home loan alleviate the stress of financial hardships. Get a loan in a few minutes by downloading the IIFL app and completing your KYC.
Q1. Why should you choose a gold loan over a home loan?
Ans. In addition to flexible repayment options and minimal documentation, gold loans offer attractive interest rates, no income-proof requirement, and no need for CIBIL.
Q2. Can you avail of a home loan with a bad credit score?
Ans. You can get a home loan with a bad credit score from banks and NBFCs, but the mortgage rates are higher. To improve your home loan eligibility, consider including a co-applicant.