Personal & Residential Loans
What it is:
Loans provided to individuals for personal purposes or buying / improving residences. Under residential, includes home loans / mortgages. Under personal, includes unsecured or secured loans for other personal needs (home renovations, appliances, etc.).
Pros:
- Enables major purchase (home) which most people can’t pay for outright.
- Lower interest rates on secured loans (for residential/home).
- Long repayment flexibility.
- Builds equity (in property) or helps improve credit if payments are timely.
Cons / Things to watch:
- If secured, risk of losing the property (or other collateral) if repayments aren’t met.
- For residential/home loans: downpayments required; property valuation, legal fees, etc. add cost.
- Unsecured personal loans: higher interest; stricter eligibility; more risk if missed payments.
| Feature | Details |
|---|---|
| Secured vs Unsecured | Residential loans are typically secured by the property. Personal loans may be unsecured or secured (e.g., using an asset as collateral). |
| Interest & Rates | Secured residential mortgages tend to have lower interest rates (lower risk to lender). Unsecured personal loans have higher rates because there’s more risk. |
| Repayment term | Residential mortgages often have long tenures (many years), personal loans shorter (few months to few years). |
| Amount | Residential loans tend to be for large amounts (value of property etc.), personal loans smaller. |
| Purpose & Uses | Buying a home; refinancing a home; renovating; sometimes buying land; personal emergencies; debt consolidation; lifestyle (travel, etc.). |