Check Eligibility, Interest Rates, and Repayment Period for a Top Up Loan below.
What is Top Up Loan: Sometimes you need a second pair of hands to assist you in achieving your goals. How nice would it be to have someone who knows your goals and is always willing to assist you? A top-up loan is one such product that meets the criteria. A top-up loan is a financial aid offered by banks or home financing businesses to enable you to easily realise your ambitions with only a little additional financial assistance.
Let's look at an example to better grasp what a top-up loan is.
Assume your bank has granted an Rs.60 lakh house loan with a ten-year repayment schedule. Your loan's outstanding principal sum is Rs. 36 lakhs after 5 years. Now, instead of taking out a costly personal loan to finance a major renovation in your home, you can take out a top-up loan (a loan that supplements your existing home loan).
A top-up loan is a loan provided by the bank in addition to your existing house loan. Banks provide top-up loans over your current balance, similar to how you top-up your mobile balance when it runs low. This may have piqued your interest in learning more about the product.
A brief guide to everything you need to know about a top-up loan is provided below:
Meaning of a Top-Up Loan:
The term "top-up loan" refers to a loan that is used to supplement.
A top-up loan is a type of loan offered by banks, housing finance firms, and other financial organisations that allows you to borrow money in addition to your existing mortgage.
Top-Up Loan Benefits:
Eligibility: Not everyone who has taken out a house loan from a bank is eligible for a top-up loan. Before issuing the top-up loan, several variables are considered. Banks examine the borrower's repayment capabilities and track record concerning prior home loan repayments. If your credit record is good, banks will offer you a top-up loan in exchange for a processing charge. Banks may waive the processing charge in specific situations.
Tenure: Top-up loans are granted for either the remaining term of the existing house loan or for ten years. From one bank to the next, the tenure varies.
Interest Rates: The interest rates on top-up loans are somewhat higher than the interest rates on house loans. When compared to the interest rates on a personal loan, this is a bargain.
Use of a top-up loan: You can use a top-up loan to modify or build your home, or to cover personal costs such as paying for your children's school. You cannot, however, use the sum of the top-up loan for speculative reasons.