Are you repaying a home loan that you availed for buying your dream home some years before? Do you need some urgent funds for covering the expenses of marriage, travel or a medical emergency? You can avail a top-up loan on your existing home loan and fund all your needs super easy. Yes, you don’t need to apply for a fresh instant loan such as a personal loan when you have an existing housing loan. Read on and know more about the top up loan!
What is a Top-Up Loan?
A top up loan lets you borrow extra funds above and over your ongoing or active home loan account. It is a handy solution for an instant monetary requirement. It is because you don’t need to go through the time-consuming formalities of a new loan.
What Is The Need For Applying For a Top Up Loan?
The biggest benefit of availing a top-up loan is that you are free to use the loan amount for anything as per your needs. There is absolutely no restriction on how you need to use the loan money.
How And Where You Can Use a Top-Up Loan?
Most of the borrowers use the top up loan to fund their needs such as:
- For home renovation and home improvement
- For debt consolidation
- Opting for a big-ticket purchase like a car or going on an overseas holiday
- To enhance your limit of cash liquidity
- For business expansions
- For covering the cost of an upcoming marriage
- For all other personal needs
How Much Can You Avail As a Top-Up Loan?
Various banks and non-banking finance companies (NBFCs) may have different amounts qualifying as the top up loan. However, many leading online lenders may let you avail as higher as up to Rs.1.5 crore.
What Is The Rate of Interest And Tenor of a Top-Up Loan?
Compared to a new loan that you may take such as a personal loan which may have the interest rate of 12.99%, a top up interest rate is just 1-2% more than a home loan. Also, you get to enjoy a tenor almost as long as that of a housing loan. Hence, managing the overall costs of a top-up loan is not taxing on your pockets. You can also use the top up loan calculator to know how much you can get as per your eligibility.
What Are The Reasons To Apply For a Top-Up Loan?
Here are some reasons making the top up loan a great idea to opt for:
- Avoid Availing Multiple Loans – You can avoid numerous loan applications to fund your needs by opting for a top-up loan if you have a home loan account.
- Affordable Rate of Interest – A top-up loan interest rate is affordable as it may be just 1-2% more than your home loan. Overall, it is affordable when compared to credit cards and personal loans.
- Longer Tenor – A top-up loan increases your overall loan amount; hence you can always ask for a longer tenor. As a result, it can increase the housing loan by some years. Thus, you can enjoy paying smaller EMIs within your budget.
If your existing lender is not offering the top up loan facility, then you can opt for the home loan transfer and avail it from your new lender.
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