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5 Reasons Why Top-up Home Loans Make Sense

Kolkata, November 8: There are situations when we require to raise some immediate funds. Breaking existing investments is one way to get that money. The other way is to take a loan. If you have a home and are paying an EMI for it, a top-up home loan can be a great idea to raise required funds. 

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A top-up loan is given by a bank over and above your home loan. First, we will see whether you are eligible for a top-up loan.

Eligibility: You need to have availed a home loan from a bank to be eligible for a top-up loan. However, it is not available to everyone who has taken a home loan from a bank. Whether you are eligible for a top-up loan will depend on many factors. The bank will take a look at your track record regarding your payment for your existing home loan. If your credit report is good, the bank will give you a top-up loan. 

Now , we will look at some benefits a top-up loan and why it is a wise decision to take a top-up loan when there is a requirement for funds. 

1. Lower interest rates: Top-up loans are against your home equity and hence interest rates are a few basis points above the home loan interest rate. For example, if your home loan interest rate is 8.5 per cent, the top-up loan would be at around 8.6 per cent. This makes a top-up loan much cheaper than other loans like personal loans where the interest rate may be 17 per cent and above. 

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2. Use the money for any purpose: You can use the top-up loan for home renovation, but you do not require to use the top-up loan for any specific purpose. A top-up loan can be used to meet any funding requirements, whether it is personal or professional. You can treat it as a personal loan and use it for meeting wedding expenses or for emergency medical expenses. This makes a top-up loan suitable when you have requirement for funds for any purpose. However, such a loan cannot be used for speculative purposes or to purchase another house. 

3. Longer tenure: Top-up loans are available for up to 20 years or until the tenure of your existing home loan. Other factors like your age, customer profile, income, market value of the property and so on are also considered. The tenure for a top-up loan is thus much longer than a personal loan. 

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4. Higher loan amount: You can avail a top-up loan of up to Rs 50 lakh or more. The loan amount can even be higher than the loan amount on your home. It will of course depend on the property value. 

5. Easy processing and documentation: The processing for a top-up loan is easy since the paper work is already done. You also do not need to submit any documents because they are already with the bank. So getting a top-up loan is easy and hassle-free. 

So, if you have a home loan, a top-up loan is a great way to meet your need for funds.

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