Many a time, the amount of money that you avail for a home loan may fall short of the costs linked with the settling up of a new place. To meet this expenses, some people have no other choice but to drain their savings while other opt for personal loans.
Taking a personal loan while you are repaying the home loan for the initial years, and a few years into it, you can avail of Home Loan Top Up facility to settle the personal loan. Since personal loans are unsecured credits and come with a higher interest, clearing them quickly is the way to go.
Let’s take out some time and know some details of a top up loan and why it’s needed especially if you have opted for the home loan balance transfer facility recently.
What is a top up loan?
A top up loan is a unique facility that’s offered only by reputed online lenders over and above your ongoing home loan once you match the lenders’ terms and conditions. The maximum amount that you can avail as a top up loan is up to Rs.50 lakh.
Example – You availed a home loan 2-3 years before to buy a property. In the next couple of years, you wanted to give a new lease of life to it by renovating it as per the new designs and interiors, but don’t have enough money. What will you do? You can always opt for a personal loan but pay a higher rate of interest. That’s when availing a top up loan from your home loan lender at a lower rate and a longer tenor can help.
Why should people go with the top up loan?
A top up loan is more or less like a personal loan as it serves the similar purpose along with the hassle-free online application process. However, it is their interest rate that makes all the difference. The interest rate of the personal loan is higher while the top up loan interest rate is only 1-2% more than your ongoing home loan.
The top up loan is nothing but an extension of the home loan and hence, you need to submit any security or collateral for it.
Usually, the tenor of your top up loan comes with a tenor of 10 years which is enough to settle it without affecting your monthly budget. However, its tenor also depends on the remaining duration of your current home loan.
Example – If you have only 7 years left to settle your home loan outstanding amount, then you won’t get a duration any more than 7 years to repay the top up loan. Thus, it’s good to avail of the top up loan when your home loan is still young and in its initial years.
What’s the eligibility of the top up loan?
Although the top up loan eligibility varies from one lender to another, the basic eligibility criteria for availing the loan is that you will get it if you have an ongoing home loan.
All that you need to do is – approach your current lender to extend you the facility of the top up loan. Many lenders can let you apply online at lowest housing loan interest rate and an extended tenor with quick approval and disbursal. However, you will get the top up loan only when a lender is satisfied that you have a fair repayment history.
The Bottom Line
If you need to fulfill some personal wishes that require money and it’s not possible as the home loan is active, you can opt for a top up loan and get started! Good luck!
