When one borrows a housing loan, it does not necessarily put an end to all financial commitments. There is often a need to bear additional expenses like home improvement, renovation costs or other expenditures like medical emergencies. While repaying a housing loan, one might face financial crunch in meeting these additional expenses. Here, a top-up loan can be that one-stop solution to cater to your immediate financial needs.
What Are Top-Up Loans?
It is an additional loan of up to Rs. 50 Lakh which you can avail on your existing housing loan. Top-up loans come with lower rates of interest and get disbursed quickly. Also being an existing customer, the lending institution doesn’t require additional documentation to approve these loans. This streamlines the process of availing finances when you’re in urgent need of cash.
In most cases, lenders allow borrowers to repay this loan throughout an extended tenor. Borrowers can avail a Top-Up Loan from leading NBFCs in 2 ways –
If the borrower carries out a home loan transfer
If the borrower has successfully made home loan repayments for at least 2-3 years
What Are The Benefits Of Top-Up Loans?
The advantages of top-up loans are numerous including:
Simple Eligibility Criteria
As top-up loans are availed on an existing housing loan, a lender doesn’t need to assess the borrower’s creditworthiness to sanction the funds. Having a stable repayment history helps make this process faster.
A top-up loan interest rate is usually lower compared to the interest rates of loan against property or personal loans. Hence, it’s affordable too.
Top-up loans are approved and disbursed more quickly than a new loan. As you’ve already built a credit relationship with your lender, your application will be processed faster, leading to quicker disbursal.
A top-up loan usually has a longer repayment but that also depends on the existing home loan tenor.
No End Usage Restriction
Unlike the home loan, this additional loan comes with no end usage restriction. So, you can utilise the funds for diverse purposes starting from home renovation to medical emergencies.
Allows You To Avoid Taking Multiple Loans
Top-up loans let you avoid running into multiple loan applications when you are already repaying an existing home loan. Taking up another fresh line of credit can also hamper your credit profile. So, with top-up loans, you can easily meet your requirements without affecting your financial history.
Get A High-Value Loan
Top-up loans are even beneficial to avail income tax exemptions, like home loans. In case a borrower has proof of utilising the funds from a top-up loan to repair or renovate a residential property, tax exemptions up to Rs. 30,000 can be claimed against the total interest paid in a year.
So, check the interest rate on offer and avail the manifold benefits of top-up loan which it comes with.
How To Procure Top-Up Loans?
Follow these steps to apply for top-up loans –
Fill up the application online from the lender’s official website
Put in the top-up loan amount
Provide all the necessary details of your existing housing loan
Upload the required documents and pay the minimal processing fees
Submit the online application
You can use a top-up loan calculator to determine the loan amount and meet your financial needs at ease. Ensure to understand everything about Top-up loans on home loans to take advantage of this emergency fund.