For many people, purchasing a home may not be possible with their money. However, borrowing a Home Loan and repaying the money in easily equated monthly instalments can make it easier. Such a Loan usually has a long repayment tenure, which goes up to 30 years. This reduces the burden of the EMIs on your monthly income.
Besides being affordable, such Loans also offer various benefits. The facility of a Home Loan Top-Up is one of them.
What is a Top-Up Home Loan?
A Top-Up Home Loan works like a Personal Loan. It is offered by banks on top of your current Home Loan. The amount available as this Loan can be within the limit of your existing Housing Loan or above it. Your lender usually decides this and depends on factors like your latest credit score and repayment history.
Banks usually offer Top-Up Home Loans to their existing Loan customers. They may also provide this Top-Up Loan to those who avail themselves of a balance transfer of their Loan from another bank to that bank. To apply for a Home Loan Top-Up, lenders need you to have six to 12 months of clear repayment records. Besides this, banks may need you to have a good credit score and a monthly income that covers the additional Loan amount.
Benefits of Top-Up Home Loans
When you apply for a Home Loan Top-Up, you can enjoy the following benefits:
- Speedy approvals
Usually, Home Loan Top-Up is easy to avail of. Banks have already determined if you are eligible for a Home Loan and typically would not require much documentation for the new Loan. Hence, as an existing Loan customer of the bank, you enjoy the benefit of quicker approval and disbursal of the Loan amount.
- No restrictions on usage
A Top-Up Loan works like a Personal Loan. It has no end restrictions on how you use the borrowed funds. Hence, you can use it for a variety of purposes. For example, you could use the money to start or grow your business for medical emergencies, extend an existing property, and fund your child’s education.
You can also use the funds from a Home Loan Top-Up to renovate an existing property or cover the expenses of your children’s wedding.
- No security needed
Since you are an existing Home Loan customer of the bank, you do not need any additional security to avail yourself of this Loan.
- Enjoy tax benefits
You also enjoy tax benefits in your Top-Up Loan when you use the funds entirely for renovation, extension, construction, and repair of a residential property.
Conclusion
A Top-Up Home Loan offers multiple benefits to borrowers who want low-cost funding for various reasons. It also helps borrowers who need emergency funds.
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