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Home financing vs personal financing: what’s the difference?

A lot of the time, our teams are asked by customers about the difference between a personal loan and a home loan, so let’s talk about it.

Please note that Huspy does not offer personal financing services.

While they both use the word loan, a personal loan and a home loan are different types of loans serving two different purposes.

A home loan, also known as a mortgage, is a secured loan specifically designed to help individuals or families finance the purchase of a home or property. It is tied to the property being purchased and is used to cover a significant portion of the property's purchase price.

While a personal loan in the UAE can be used for various purposes, such as debt consolidation, medical expenses, education, home renovations, or even personal events.

The loan amount is also different. Personal financing loans usually have lower maximum loan amounts, typically based on the borrower's creditworthiness and income. Home financing loans usually involve larger loan amounts, factoring in the property's value, the borrower's income, and their ability to make a down payment.

And finally, the repayment period of the loan differs too. Personal loans are shorter repayment periods, ranging from a couple of months to a few years. Home loans, on the other hand, can typically range from 15 to 25 years.

Both loan types have their own terms and conditions and support from a financial professional is important before making any lending decision. So we hope our comparison has made the difference between home financing and personal financing a bit more clear.

Written by Huspy Team

Published on 18 July 2023

Home buying made simple

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7th Floor, The Bay Gate,

Business Bay, Dubai

United Arab Emirates

PO Box 6769, Dubai

Trade Licenses: 2489 and 584276

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