At times, urgent cash requirements may come up to fund any medical emergency or some other need. You may need to take up a personal loan or use your credit card to meet the necessary expenses. A home loan top-up can be a better financial alternative in such circumstances.
What Is Home Loan Top-Up?
It is an additional loan borrowers can avail over and above the existing home loan. If you’re already repaying an existing loan, it’s advised not to take up a new line of credit as it affects your CIBIL score. Here, taking a top-up loan can help you with immediate funding without straining your finances and keeping your credit score unharmed. Moreover, applying for a fresh loan or getting involved in multiple loans includes –
- The hassle of new documentation
- Processing charges
- Fresh credit enquiry
When you apply for a home loan transfer facility, many lenders offer a top-up loan if you’ve made successful repayments of the existing loan for at least 2-3 years.
How Can Top-Up Loans Help You?
A top-up loan is beneficial in numerous ways like –
a. Serves A Multitude Of Purposes
There is no end-usage restriction on a home top-up loan. Thus, it covers various expenses like wedding, home renovation, purchasing furnishings, paying hospital bills, etc. Irrespective of your purpose, a top-up loan provides with an immediate financial solution.
b. Tax Benefits
Under the Income Tax Act, home top-up loans also qualify for tax deductions. You can enjoy tax rebates if you use the top-up loan to renovate your home or purchase or construct a home.
c. Easy To Avail
Availing a new loan is a time-taking process as it involves fresh documentation, holding good credit score, and meeting other criteria. But a top-up loan is drawn over your existing mortgage. So, the lender is already aware of your credit score, familiar with the documentation and also knows your repayment capability. This makes the process of availing home top-up loans faster and hassle-free.
d. Low Repayment Cost
A top-up loan interest rate is lower than that of personal loans or loan against property. Thus, it not only meets your urgent financial needs but also helps you save more on your loan repayments.
e. Longer Tenor
Top-up loans usually come with an extended repayment tenor that is considerably longer than a personal loan. This makes the repayment schedule easier without straining your finances.
Where To Apply For Top-Up Loans?
You can apply for top-up loans from all leading financial institutes and NBFCs like Bajaj Finserv. You can procure a high-value top-up loan provided your property’s value is also high.
How To Apply For A Top-Up Loan?
Here are the simple steps:
- Fill-up the application form available at your lender’s website
- Provide all the necessary details
- State your loan amount
- Submit the request
Simultaneously, you can use a top-up loan calculator online to compute your expected loan amount and fix your budget accordingly.
The flexibility of home top-up loan makes it the best option to fund your additional requirements. Make sure you know everything about top-up loans on home loans before availing one.
Author Bio: This article has been shared by Anamika Verma who loves to write on various topics related to home improvement, personal finance and etc.