A home loan is a great financing option if you are looking forward to purchasing your dream house. Since home loans are a huge financial liability, you should access all the aspects of your home loan before availing it. Low interest rate, flexible repayment tenure, and low prepayment charges are some of the important benefits you should look for while availing a home loan.
Apart from these benefits, most financial institutions also provide you the facility of additional top-ups. A top-up loan can be availed over and above your home loan. These top-ups depend on your loan amount and vary from one financial institution to another. The top-up loans can be used for multiple purposes like renovation of your house, extension, etc. Some of the other benefits of availing a home loan top up are mentioned below:
- You can utilize top-up loans for your personal needs such as for the education of your children, business requirements, managing wedding expenses, etc. Therefore, it’s a better option for those who have an existing home loan.
- The rate of interest on a top-up home loan is lower as compared to a personal loan or a credit card loan.
- You can also avail several tax benefits on your top-up home loan. However, the tax benefit can only be availed if you utilize the loan amount for your home-related expenses.
- The tenure of a top-up loan is more as compared to personal loan, credit card loan and gold loan.
- Top-up loans can be availed easily as the lenders already have all the information and documents with them because of your home loan.
The eligibility criteria to avail home loan top-ups are mentioned below:
- You should have an existing home loan with the financial institution.
- You should have a good repayment history of your home loan.
- There should be a mortgage on the name of the financial institution.
The home loan top-ups have their own set of terms and conditions, which are mentioned as below:
- You can avail a home loan top-up only after few months or years of repayment of your home loan. This period can vary from one financial institution to another.
- The top-up loan amount depends on the net worth of your property.
- You don’t have to pledge any collateral to avail a home loan top-up. This is because your home loan is already a secured loan.
- The tenure of the top-up loan is dependent on the tenure of your outstanding home loan amount.
If you are on good terms with your home loan provider, your top-up loan can be processed within a short span of time.
Now that you are well aware of the benefits of availing a top-up loan, ensure that you make the most of it in order to fulfill your financial requirements. Lastly, make sure that you are aware of all the clauses levied by the financial institution on your top-up loan. This will help you avoid any inconvenience in the later stage.