Finding money might be challenging, specifically if your savings are insufficient. Given this situation, getting a loan is probably the most widely recognized and acknowledged way to move forward with your plans to buy a home. However, there are instances when you want additional funding, and this is when a top-up on home loan comes in handy.
A top-up loan enables a person to take out an additional loan on top of the current housing financing to address the new needs that their cherished home requires. Get a top-up on home loan to easily access money to meet your requirements.
What is a Top-Up on a home loan?
Adding more money to an existing home loan is possible through a top-up. It enables you to get more money on the same loan. The procedures and documentation involved in applying for a new loan are not necessary. A top-up on home loan is an excellent solution if you currently have a loan that you’re paying off but still lack the necessary funds to buy a house. This type of loan is a one-time offer. Only people with an active housing loan in their names are eligible to use this feature. This loan can be used for house renovations or home expansion.
Why a home top-up loan is a good idea
- It is better to get a top-up on home loan since you do not have to worry about approvals and documentation rather than acquiring an additional loan to finance your home renovation and modification.
- Since you are making your current EMI payments on schedule, your connection with your financial institution is amicable. As a result, you save time, money, and effort.
- Your current collateral and minimal supporting documents are more than sufficient to get extra funds.
- Lending institutions quickly approve your request for a top-up loan because they are aware that you are paying your current loan’s EMIs on time.
- Additionally, they’ll provide enticing interest rates and an extended payback period as well as a lower amount of EMI.
Benefits of a Top-Up Loan
By relying on a top-up loan, you gain access to the following advantages:
- The funds have a flexible end use, so you can utilize them for a variety of needs including re-designing, building, upkeep, etc.
- The borrower may be eligible for tax benefits if the money is only used for house building or remodeling.
- Use the money for personal or professional needs, if the bank permits.
- In comparison to personal loan interest rates, the top-up loan’s interest rate is cheaper.
- The disbursement of loans happens quickly.
- It is simple and convenient to apply for a home top-up loan.
Required documents
Documentation for your home loan and evidence of your loan payback history are required for loan top-ups. Therefore, your present lender may have your records if you apply with them for a top-up loan. Here is some documentation you’ll need, though, if you’re looking for a top-up on home loan.
- KYC records
- Proof of address
- Property documents
- Banking records
- Proof of income, etc.
Things to think about before applying
- Different lenders have different lending terms for top-up loans. Therefore, find out the length of the loan before applying.
- Prepayment penalties are not applied to top-up loans.
- Your top-up loan’s interest rate may be higher than the interest on your mortgage. Before applying, it is a good idea to check the rate of interest on such loans with your lender.
- Top-up loans with final uses like building, remodeling homes, etc. may qualify for tax advantages.
- The top-up loan’s lending corpus may be capped by the lender. Furthermore, certain lenders could restrict loan allocation to particular home-related finance.
- You must make sure that your lending institution provides loan top-ups for your financial needs. You must look for a new lender if not.
Conclusion
You can apply for top-up house loans if you already have a mortgage but urgently need more money. The majority of NBFCs and lenders provide top-up house loans at competitive rates. Your eligibility will determine the loan amount. The rates of interest are the same as those for home loans. The advantage then? A top-up on a home loan could be used for any purpose. A home loan can be balanced with a top-up loan from a renowned financial institution like Hero Housing. If you decide to go with this option, take into account the processing costs for moving the loan to a financial institution, the costs of the present foreclosing on your home, and the variation in the rate of interest. Choose the option that best meets your needs after carefully weighing all of your options.
