Opt for Top Up Home Loans in case you need extra money

Posted by poonam dambare on October 3rd, 2018

Opt for Top Up Home Loans in case you need extra money
Opt for Top Up Home Loans in case you need extra money

Opt for Top Up Home Loans in case you need extra money
Buying a home, of your own is most often accompanied with the home loans of one’s choice. The home loan is the best possible option for the people if they are looking for the additional funds to complement their home purchase. The home loan allows substantial savings of your available funds and allows you in getting several benefits, which come attached with the home loans. He home loans prove quite beneficial o the people, to relish the dream of having an own home.
But, it has been seen that there arise some crunch financial situations when you need some additional funds during the time when you are awarded into the home loans and carrying it. So, what’s the way to get rid of those crunch financial crises, which may often prove to be troubling to you?
To deal with such situation you may take the services of a Top-up loan on your existing home loans, which can always prove to be a cost-effective solution for you. While there are several other ways out to overcome your financial needs, one easy and most cost-effective solution appears in the form of the Top-Up Home Loans.

What is a Top-up home loan?
A top-up home loan is a kind of loan, which is readily available to you over the existing home loan. Quite different from the Personal Loan, the top up home loan is very helpful in encountering a financial crisis, which can serve the purpose just like Personal Loans; you can utilize the top up home loan for covering various emergency situations like home renovation, covering medical bills, and paying tuition fees, etc. Thus, if you are already a home loan borrower and you are already paying your EMIs of your home loans, on time and not defaulting on it of any kind, you can avail the top up home loan to avail additional finance required to meet emergency situations.

What are the eligibility criteria for availing to pup home loans
The top-up home loans are availed by a person, who are already running with the home loans, The banks offer the top-up loans to the people, who are existing home loan borrowers and thus, this kind of loan is not available as a fresh loan, separately. There are certain conditions, which a person needs to meet to be eligible for the top-up home loans. These are listed below:

  • It can only be offered, if the person has a good track record on existing home loan
  • A healthy credit score of the person is needed

Conditions associated with the top up home loans
The top-up home loans comes with some conditions, among which the person needs to carry an existing home loan; while the second is that it being available just for 2 years to 3 years, in some cases; while in other cases, it available for a maximum tenure of 15 years. In fact, when it comes to the top up home loan tenure, the tenure is decided by the banks, which depends on various factors like how much duration of the home loan is still available, while there are some other banks, that have their own conditions when it comes to the top up home loan tenure, Also, the top up home loans are not available with all the banks, there are some banks, which don’t provide any such facility of additional funds.

Benefits of a top-up home loan
The top-up home loans are accompanied with several benefits, which are listed as below:

No collateral required
Since you are already having an existing home loan, and this top up home loan is provided on the existing home loan, there’s no need for additional collateral. You are required not to furnish any more collateral, as your existing home loan is already a secured loan, and put collateral of your home loan.

No restriction of usage of the funds
Just like Personal Loans, there’s no restriction on how you can utilize the sanctioned funds. It depends on your sole discretion on how you want to spend the sanctioned loan amount. You can cover medical bills, pay tuition fees, or can fulfill any personal requirement, just as you are free in Personal loans. No restrictions of any sort, you are completely free to spend the available funds, in the way you like. Feel free to use the funds, as per your convenience.

Low-interest rate as compared to other loan types
While the Personal Loans are costly and bear the high rate of interest (since they are the unsecured loans), the top up home loans is the low-interest rate loan types, which is even cheaper than gold loans (which is also a secured loan). In fact, the home loans are the cheapest available loan types in the country, and since the top up home loan is given on your existing home loan, and featuring the security of a home as collateral, the rate of interest for the top up home loans is very low.

Instant funding available
Since the top up home loan is the call for the additional funding on your existing home loan; it is readily available for the disbursal. With the instant funding, you are allowed to meet any emergency conditions, which require additional funding. Also, the top up home loans requires very few verification and documentation, and thus it’s a source of instant funding.

No documentation required
The top-up home loan comes readily available on your existing home loan, and thus documentation required is very few. In fact, there’s no collateral to put on, and all needed details are fetched from the existing home loan details, and thus the documentation required is almost negligible. The banks and lending agencies, check through the fresh CIBIL Score in order to check what’s the present credit score is, and once found eligible, the top up home loan is sanctioned in the bank account of the applicant.

No such eligibility criteria check
There are so many benefits attached with the top up home loans, and since they are the funds, which come with the existing home loans, the benefits are more or so, because of the home loans. With no eligibility check, just with the exception of the credit score check, and a check of any defaulting of the home loans, the banks carry no other eligibility criteria check for the application of the top up home loans.
Why a Top-up home loan is better than other loan types?
There are some factors of the top up home loans, which makes these loans better than other loan types, like the gold loan and personal loans. These are given below:

  • The top-up home loan is available at a low rate of interest as compared o gold loans or personal loans.
  • The top-up home loans are available for the relatively longer duration, in some cases, it may extend up to 15 years, while the other loan types like gold loans and personal loans are relatively shorter duration loan types

Downside of a Top-up home loan
Every loan type comes with some pros and cons. Along with several beneficial ides of the top up home loans, there are some downsides of these loans, which are mentioned below:

  • The main issue with the top up home loan is that it is only available for the people, who are already carrying their home loans on their shoulders, while the Personal loans and other loan types are the fresh loan types, which require no existing loan responsibilities
  • Also, the top up home loans can only be approved by the bank, through which you are carrying your home loan. You are not free to knock the doors of any banks for the top up home loans. While the personal loans and gold loans are readily available with all banks and you can approach any bank for the same
  • You don’t have any choice, when it comes to the top up home loans, either opt it on the terms and conditions as laid down by the bank or else drop your plan for the top up home loan. However, when it comes to the personal loans and other loan types, the person has several offers and deals as available with several banks and NBFCS and other lending agencies. A person can compare all the plans and deals and can make the choice of the better loan deal from any bank.

How to get a Top-up home loan?
Opting for the top up home loan doesn’t require much effort from your side. Any person can avail the top up home loan, with much ease. All you need to get a top-up home loan is to request your existing home loan bank, to consider offering you a home loan top-up. Once, your eligibility is checked from their side along with the checking of the loan tenure and the conditions required, the person is liable to get a top-up home loan from the bank.

Also, if any bank is not offering you any such facility of the top-up home loan, the person can still get the top up home loan from other banks. However, for this, you need to opt for the home loan balance transfer and as soon as, your remaining home loan balance is transferred to the other bank, you are eligible to get the top-up home loan. However, it would be better if you check various terms and conditions as laid down by banks for the home loan balance transfer and also the top up home loan, in case you opt for the home loan balance transfer.

Opting for top-up home loans allow a person to get readily equipped with the instant cash, which can be utilized to meet urgent needs covering various requirements. The Top-up home loan is one of the quick disbursal loan types, which is readily available by several banks dealing in home loans. The Top-up home loans may or may not carry any processing charge, and it may depend on the banks.

The Top-up home loan is just like an icing on the cake, which allows you in covering all your emergency financial needs, which otherwise would have been a difficult task to cover, and at the same time, you are availing the benefit of additional funds, with the lower rate of interest, which comparatively you need to incur on Personal Loans and other loan types.

With the Top-up home loans, you are entitled to get the additional funds, with convenience and since, they are available to serve any purpose; it just acts like a Personal Loan, where there is no restriction at all.

Tax Benefits of Top-up home loans
There are certain tax benefits of top-up home loans, but one can’t assume tax benefits same as the home loans. Here are the details:

On the interest portion of EMI
You can only claim the tax benefit if the top up home loan amount has been used for the construction of the home or for the home improvement. While the money spent for any other purpose will not qualify for the tax exemption. Also, the amount of the tax deduction depends as below:

  • For Self occupied property, the loan amount is limited to INR 30K
  • For the rent purpose, there is no tax exemption

On the principal portion of EMI
There is no benefit of tax exemption, of any kind, irrespective of the use.

The top-up home loan brings in more liability on your shoulders, and that additional EMIs, which you need to pay every month. Thus, before opting for the Top-up home Loan, analyze your entire scenario, on how needy are you for the additional funds, and if there’s any cheaper alternative available with you. Look for the solutions from your end, which requires no borrowing of additional money and then opt for the top up home loans, when required urgently.

Like it? Share it!

poonam dambare

About the Author

poonam dambare
Joined: September 28th, 2018
Articles Posted: 37

More by this author