It is normal to apply for a Loan when you require money. However, a Top-Up Home Loan is usually the best choice when you have an existing Loan. Such a Loan is obtained on top of your current Home Loan and offers multiple benefits to borrowers. Let us understand everything about a Top-Up Housing Loan.
Overview of Top-Up Home Loans
A Top-Up Home Loan is a facility offered by banks. It is an additional Loan amount you can raise over your present Home Loan. It is usually provided to customers who pay the equated monthly instalments of their existing Home Loan and require additional funds to meet their expenses.
Who can apply?
You can avail of this Loan when you are an existing Home Loan customer. Banks may also offer Top-Up Loans to customers who transfer their Loans to that bank. However, to apply for this Loan, banks may need you to have at least six to 12 months of clear repayment record. Besides this, banks may also need the following:
- Monthly income that can cover the additional amount you borrow.
- A worthy credit score.
Depending on the lender you choose, banks may require the total of your outstanding Home Loan, along with your Top-Up Home Loan, to not go beyond 70% to 80% of the property value.
Benefits
When you opt for a Home Loan Top-Up, you enjoy the following benefits:
- Varied usage
Banks let you utilise the funds from a Top-Up Home Loan for various purposes. For example, you can extend an existing property or renovate it. You can use the funds to buy gadgets. You can also utilise the funds for medical emergencies or pay for your child's wedding or higher education. If you want to start or grow a business you already have, use the funds from a Top-Up Home Loan.
- Faster approvals
Since you are an existing Housing Loan customer with the concerned bank, Top-Up Home Loans are usually approved faster. The amount is also disbursed faster.
- Easier to apply
A Top-Up Home Loan is usually easier to apply. This is because banks have already determined your eligibility. Consequently, they do not require much documentation for the new Loan.
- Tax benefits
When you opt for a Top-Up Home Loan, you can claim tax exemptions when you repay the additional amount. However, this benefit depends on the end of the top-up amount.
Conclusion
If you are in a hurry to borrow a limited amount of funds and are already repaying a Home Loan, you can opt for a Top-Up Loan to meet your needs. Such a Loan is easier to avail of, ensures faster approvals, and offers other advantages.
