Personal loans should be taken to finance your needs and not your wants. Once you are clear about your wants and needs it will become easier to manage your funds.
The temptation to take a loan is ever increasing more over due to the various new loans by the banks which lowest interest rates. You may find it tempting to purchase a washing machine or an LCD television, or even fund a holiday to an exotic destination abroad! You need to first separate your need from your wants and then plan on taking a personal loan to fund your needs. Financing your wants by borrowing is a strict no-no; as there is no end to anybodies wants, but needs are always limited.
So strike a balance between what you need and can't do without and, what you fancy. Then sign up for a loan that either create an asset or finance a must-have.
When it comes to taking a personal loan to fund the down payment towards a house it should be avoided. A housing loan is best to buy a house. One should save for the down payment and not think of taking a personal loan to cover the down payment amount.
Given the property prices in the metros, buying a house outright is next to impossible, unless you already own a property that can be sold for the purpose. Thus, there is no substitute for a home loan.
The home loans are available at a lower rate of interest and also for longer tenures (usually between 5-20 years), thus putting relatively less strain on your finances. Also, the tax benefits home loans offer Rs 1 lakh on principal repayment under section 80C and Rs 1.5 lakh on interest paid under section 24 make them attractive.
Even if your want to prepay your home loan by taking a personal loan it is not advisable as the rate of interest difference will not work out in your favor. Although windfall gain may be used to prepay your home loan but not if your repayment is in the last 3-4 years.