Home loans have a long repayment period of up to 30 years. These loans are an excellent option to obtain affordable financing for house ownership. The borrowers of a home loan often receive additional advantages. The top-up home loan is one such option.
In addition to your current home loan, you may be eligible for a top-up home loan. The amount of a top-up home loan may be equal to, greater than, or less than the overall limit of your current home loan. Based on your history of timely payments and your most recent credit score, the lender determines this limit.
The simplest approach to obtain financing for varied requirements, whether they are personal, business-related, or medical emergencies, is through a top-up housing loan. You are free to use the money obtained through a top-up housing loan any way you see fit. You can obtain the money through a top-up home loan for any purpose, including furnishing your house, traveling abroad, or an unanticipated medical emergency.
Low-interest rates
The interest rates on top-up home loans are mostly the same or only marginally higher than the interest rates on your current housing loan. As a result, you may potentially save a lot of money on interest rates with a top-up housing loan. This is especially useful for expensive purchases like a new car or home renovations. Particularly if the cost was unanticipated or unexpected. Additionally, top-up house loans typically process loans faster than other types of loans, allowing you to get the money you need right away.
No restrictions on fund utilization
A top-up loan is comparable to an unsecured or personal loan in that it does not place limitations on how you can utilize the money. It can be utilized for a variety of things, including work, education, home improvements, travel, and more. Although a personal loan gives a similar degree of flexibility, a top-up loan is typically a preferable choice due to its lower interest rates and processing fees.
Flexible repayment options
With a top-up home loan, you often receive repayment terms that are comparable to those of your first home loan. Other loans, such as gold or personal loans, do not work like this. The payback period for a top-up home loan is determined by the time left on the original loan. This implies that if you already have a home loan with a 16-year term, you can also receive a top-up loan with a 16-year term. This is a highly beneficial feature because it allows you to borrow money at a very cheap interest rate with a longer repayment period.
Simple eligibility criteria
- You must already have a home loan with the same lender in order to be eligible for a top-up loan.
- Additionally, your home loan must not be for a sum greater than the sum that qualifies for a top-up loan.
- There won’t be much paperwork you need to provide because the bank already has all the details of your home loan.
- Since the age restriction is similar to that of your housing loan, you would obviously qualify.
- You must be conscious that you must have a good track record of repaying the home loan.
- Make sure you have your most recent credit score on hand because the bank will check it.
Tax benefits
If a top-up housing loan was used purely to build, renovate, expand, or fix a residential property, then yes, you can claim tax benefits on it. The highest tax deduction possible if the loan is utilized to buy a self-occupied dwelling is Rs 30,000. If the loan was utilized to purchase a rental property, the deduction has no limit. However, the aggregate total tax deduction of Rs 2 lakh per year provided on the interest component of home loans applies to both of these.
Overdraft facility
“Overdraft facility” is a recent addition to most housing loan arrangements. You only pay interest with this service on the amount you actually utilize. This is comparable to a credit card where interest is only charged on the amount used.
This function enables you to pay back a loan without incurring any penalties. Additionally, it assists you in avoiding any further late fines.
In this manner, you can use the money from your housing loan to pay for any expenses and pay off the remaining sum once you have money in your account.
Conclusion
The finest type of home loan in India is a top-up loan. It provides borrowers looking for low-cost borrowing for a variety of uses with a wide range of advantages. Additionally, it benefits those who require emergency cash. Top-up housing loans can benefit a lot of people due to their low-interest rates and simple repayment options.
