Last Updated:June 30, 2025, 18:23 IST
Let’s get to discuss various pros and cons of each gold loans, top-up home loans, and personal loans.
Among the various credit options available, top-up home loans stand out as one of the most cost-effective, particularly in terms of interest rates and tenure.
Authored by Atul Monga – CEO & Co-Founder, BASIC Home Loan:
In today’s dynamic financial landscape, credit has evolved from being merely a transactional tool to a focused strategy. For professionals navigating evolving life goals, unexpected expenses, and pressures of rising inflation, timely access to cost-effective funds can mean the difference between seizing an opportunity or facing financial hardship. Among the most commonly considered lending options are gold loans, top-up home loans, and personal loans. While all three serve the purpose of providing quick financial aid, they differ significantly in terms of cost, flexibility, and suitability.
Interest Rates and Tenure
Among the various credit options available, top-up home loans stand out as one of the most cost-effective, particularly in terms of interest rates and tenure. The interest rates for top-up loans typically range between 8.5% and 10%, making them significantly more affordable compared to gold loans, which can reach up to 13%, or personal loans, where rates fall between 11% and 24%.
In addition to lower interest rates, top-up home loans come with longer repayment tenures, which help ease the borrower’s monthly EMI burden. On the other hand, hold loans are comparatively short-term, with tenures ranging from a few months to up to 3 years. As far as personal loans are concerned, the tenure can range anywhere from 1 year to 5 years.
Accessibility and processing time
Top-up home loans are available exclusively to existing home loan borrowers with a good repayment history. Their processing can take several days to a few weeks, as they often involve additional documentation and property valuation.
Gold loans are the quickest and easiest to access, usually disbursed on the same day with minimal paperwork. Personal loans, too, are easily accessible to salaried and self-employed individuals with a good credit profile, with processing usually completed within 1-2 days. This offers a convenient option for a quick, unsecured loan.
Loan amount
For top-up loans, the amount is determined based on the current market value of the property and the outstanding loan balance. Gold loans are secured against the value of the pledged gold, usually ranging from 75%-90% of its worth. Personal loan amount depends on the borrower’s income and creditworthiness, and is generally capped at ₹25–30 lakhs.
Collateral Requirement
Secured loans, such as top-up home loans and gold loans, require collateral. In the case of a top-up home loan, the existing property acts as collateral, while for a gold loan, the pledged gold serves this same purpose. On the other hand, personal loans are unsecured and do not require any collateral.
Which loan is right for you?
Choosing the best loan depends on your specific needs and circumstances. If you already have a home loan and prefer a longer repayment tenure with lower interest rates, a top-up home loan is an ideal choice, offering cost-effective financing options with the convenience of leveraging your existing property.
For those who need quick funds and have idle gold assets, a gold loan offers fast and accessible financing. Remember that mortgaging gold puts a valuable asset at risk, and failure to repay the loan on time can lead to the lender confiscating your gold, often at prices below market value. Additionally, as gold loans usually have shorter tenures and higher interest rates, they are suitable only as a short-term financing option.
If flexibility, speed, and collateral-free borrowing are your priorities and you are comfortable with higher interest rates, then personal loans remain the most convenient option.
It is authored by Atul Monga – CEO & Co-Founder, BASIC Home Loan
The views expressed in this article are those of the author and do not represent the stand of this publication.
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst…Read More
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst… Read More
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