When we speak of basic needs that can be funded using a Home Loan Top Up, we aren’t speaking of the basic needs of the home per say, but the basic needs of you, your family and even your business! Confused? Well, don’t be. Let us spill the beans about this one, for you. When you have a Home Loan under your name, you become entitled to certain additional facilities, such as Home loan Balance Transfer and Home Loan Top Up amongst others. While the former can be used to Avail lower Home Loan Interest Rates, by shifting the loan to another bank, the latter involves availing an extra amount, above and beyond your existing loan.
A Home Loan Top Up is a unique feature of a Home Loan, wherein the bank lends you additional funds as a loan, on your existing Home Loans. The top up is unusually offered at a similar rate as the Home Loan, or in some cases, at a few basis points higher than the home loan interest rates. In any case, the interest rate remains rather low, often falling in the range of 9-12%. The top up loan can be repaid, in conjunction with the actual loan, implying that it can be repaid over a considerably longer period of time.
The amount that can be borrowed under this facility is often decided by the bank, depending on the repayment history of the borrower as well as the available credit limit. The maximum amount lent under this facility is Rs. 50 Lakhs.
While some banks offer the top up loan as and when required, there are some others which provide it, in conjunction with the Home Loan Balance Transfer. Regardless of how and when it can be obtained, this loan can prove to be a boon, when you are looking forward to meeting some financial obligations, such as sponsoring your child’s education, bearing the expenses of a wedding, traveling, renovating or redesigning your home, buying some much-needed appliances or gadgets, and so on.
Now that you know what a top up loan is, let us take a look at why you should avail it!
As discussed above a top up loan attracts a low-interest rate of about 9 -12% which is far lesser than Personal Loan interest rates which fall in the 11-22% bracket. Since both loans allow you to use the disbursed amount on your accord, the former will prove to be lighter on your pocket, and hence, deserves your preference.
Since your bank already has all the requisite documents and knows your repayment history, the processing and disbursal of this loan are more than just convenient. Moreover, the online banking facility offered by many leading banks has made the disbursal even faster, thus ensuring you get the funds as and when required, without having to wait too long.
If you avail a top up loan for investing it towards home improvement, you can avail a tax deduction on the interest paid, as dictated by the Income Tax Act (Section 24).
If you have multiple debts under your name, especially the ones that are costing you dearly due to the high rates of interest such as Credit Card bills and Personal Loans, you can use the amount disbursed under top up loan to pay off all such credit.
Now that you know of the multiple benefits that top up loans entail, wait no longer to avail a Home Loan top up right away! You can even get this facility online, thus saving you from the hassle of personally visiting your bank. Now, that what we call convenience at your fingertips!
Reshma Rawat is a passionate writer with a decade of experience in writing for a variety of domains (finance, technology, lifestyle, e-commerce, real estate, etc.). Currently, she is working as Assistant Manager - Content @MyMoneyMantra and writes blogs & webpages on financial products (loans, credit cards, insurance, government financial policies, mutual funds, etc.).
Director- MyMoneyMantra FinTech| A senior retail and commercial banking professional, adept at handling Business Development, Sales Planning & Growth, Product Strategy, Marketing Operations and Client advisory services phygitally.
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