The Pros and Cons of Toping Up Your Home Loan

Posted by Shreekant Rao on February 4th, 2017

A home loan is an ideal way to purchase your dream home, with a limited amount of funds which you can over a short period of time. However, at times, this is insufficient and a top up loan will come to your rescue. In this article, we give you the pros and cons of toping up with this financial aid.

Pros                                           

This is an ideal way to get more funds without extra paper work. If you are in certain situation where you need extra funds for the purchase of extra parking space or even painting of the house, you can easily get a top up to accommodate this new expenses without much hassle and waste of time and resources.

As per the government regulations, you can claim tax benefits from this form of financial aid. Therefore, when you have completed with the modifications to your house, you can easily claim tax benefits for both the credit advances.

For this kind of finance, you will already need to have ahome loan. The period of this credit has to be midway before you are eligible for the application. Along with this, you will need to have a good credit score, where you can easily get a top up for the financial credit with a submission of a minimum documentation.

This additional advance finance will help you adjust your finance for another need, for example, fund for your child's education or even your health.

Cons

There are certain cons to this form of monetary investment which involves certain catches.

This is a form of debt upon another debt. You must be ready to pay off extra finances when you are required to do so. Before you apply for this form of financial credit, you must know the requirements and understand your ability to pay back the higher interest rates along with the principle amount.

Lenders may tend to have hidden conditions and loop holes that are associated with this form of investment. The lender may give you exceptional quotes for the top up, where you can pay partial amounts of the home loans in the top up. However, the house loan will still remain intact, causing you to pay more in the top up.

The process to apply for a top up requires little documentation. However the fact remains you will have to pay double for the additional finance credit. The con of this condition is that, you may have to pay it in the same tenure period of the previous advance credit.

Although the finance credit is offered on an unsecured condition with exceptionally attractive rates, the fact remains that the lender still has you house has a collateral if you fail to repay the full amount in the right period of time.

[Source: http://www.sooperarticles.com/finance-articles/pros-cons-toping-up-your-home-loan-1373095.html?]