6 Benefits of Top-up home loans
Long-term loans, such as home loans, can last up to 30 years. These loans are an excellent option to obtain low-cost financing for the purchase of a property. Borrowers can also benefit from other features of a home loan. A top-up home loan is one such option.
Top-up home loan is a type of personal loan that is given on top of your existing mortgage. A top-up home loan amount could be within your existing home loan’s overall maximum or even exceed it. The lender sets this limit based on your repayment history and current credit score.
A top-up home loan is the most convenient way to obtain financing for a variety of purposes, including personal, business, and medical emergencies. There are no limitations on how you can use the funds from a top-up home loan. Whether you need money to equip your home, go on a foreign trip, or deal with an unanticipated medical emergency, you can get it with a top-up home loan.
Low-interest rate:
The top-up home loan interest rate is generally the same as or slightly higher than your existing home loan interest rates. As a result, a top-up house loan may be able to save you a significant amount of money in terms of interest rates. This is especially useful for large-ticket purchases such as a new vehicle or a home remodel. Especially if the cost was unexpected or unforeseen. In addition, top-up home loans typically have a shorter processing period than other types of loans, allowing you to get the money immediately.
Flexible repayment options:
A top-up home loan usually has repayment terms that are identical to your original home loan. This isn’t the case with other types of loans, such as personal or gold loans. The repayment period for a top-up home loan is determined by the remaining term on your existing home loan. This means that if you have a home loan with a 10-year term. You can receive a top-up home loan with a 10-year term as well. This is a great feature since it means you can borrow money at a cheap interest rate and repay it over a longer period of time.
Easy eligibility criteria:
- To qualify for a top-up home loan, you must already have a home loan with the same lender.
- A home loan amount that is not greater than the amount available for a top-up loan is also required.
- Because the bank already has all of the information concerning your home loan, you won’t have to provide such documents.
- You would be eligible because the age limit is close to that of your home loan.
- You must have a strong home loan repayment history; this is something you must be aware of.
- The bank will look up your most recent credit score, so be sure you have it.
No restrictions on fund usage:
A top-up loan is similar to an unsecured or personal loan in that the cash can be used for any purpose. It can be utilised for a variety of purposes, including business, education, house repairs, holidays, and so on. You might take out a personal loan, which provides similar flexibility. But because of the lower interest rates and processing fees, a top-up loan is usually a better alternative.
Tax Benefits:
Did you know that top-up house loans are eligible for tax benefits? Yes, if the loan was used entirely for the building, renovation, extension, or repair of a residential property, you can claim tax benefits on it. The highest tax deduction possible if the loan is utilised to buy a self-occupied home is Rs 30,000. If the loan was utilised to buy a rental property, the deduction is unlimited. Both of these, however, are subject to the aggregate total tax deduction of Rs 2 lakh per year available on home loan interest.
Overdraft Facility:
The overdraft facility is a recent addition to most home loan programmes. You only pay interest on the amount you utilise with this facility. This works similarly to a credit card in that you only pay interest on the amount you use.
This function allows you to make mortgage payments without incurring penalties. It also aids in the avoidance of any late fines.
Conclusion
The greatest home loan product available in India is a top-up home loan. It provides a variety of advantages to borrowers seeking low-cost financing for a variety of objectives. It is also beneficial to folks who require emergency finances. Top-up home loans can benefit a huge number of people due to their cheap interest rates and simple repayments.