You may have already availed a home loan to finance the purchase or construction of a house. Such secured loans come with long tenors and substantial EMIs which can make it difficult for you to avail further financial assistance. However, you may require emergency funds for medical situations or for a home renovation or even for your business.
Whatever the reason might be, seeking additional funds comes off as the next step to meet them. Hence, to cater to your immediate monetary requirement, you can avail a top up loan over and above your existing home loan and continue paying clubbed EMIs of the home loan and the top-up.
What are top-up loans?
As the name implies, top-up loans are additional credits that specific lenders allow you to borrow over an existing home loan. You can avail a loan amount up to Rs. 50 Lakh with a relatively lower top-up the loan interest rate.
Keep in mind, you can only obtain this advance if you have been paying your existing EMIs steadily and if the lender seems you deemed fit. Here, one’s repayment track record and credit history are of crucial importance in availing this top-up credit facility.
The most significant benefit of using home loan top-ups is the no end-usage restriction. You can avail a top-up loan for funding expenditures like –
- Renovation of house.
- Consolidation of debts.
- Make big-ticket purchases such as buying a car or going on a vacation.
- Increasing working capital in your business.
You can opt for a home loan transfer if your current lender does not provide this facility. Opt for a lender, when conducting a balance transfer of Home Loan. Few NBFCs offer added benefits like zero charges on part-prepayment and foreclosure facilities, no additional documents when you avail the loan, online loan account management, attractive rate of interest, etc.
Benefits of availing top-up loans
Here are the multi-fold benefits of availing a top-up loan –
A vital source for emergency finance
In case of emergencies, you are not required to obtain a new loan. Besides, as this credit facility is availed from your current lender – you can enjoy instant approval of sum, the quick disbursal, and nominal paperwork.
Simple eligibility criteria
As one already has an existing relationship with the lender, they do not reassess your creditworthiness before sanctioning the loan. This makes availing top-up credits easier and quick.
Convenient to repay
Top-up loans have an extended and much-relaxed repayment tenor. You can use a top-up loan calculator to calculate your EMIs in advance, which may depend on your existing housing loan tenor.
Although top-up loans are unsecured advances, they are more affordable than other forms of collateral-free loans. This assists you to save bigger on interest obligations while availing additional funds. Besides, with no restriction on usage, you can use this credit on how you deem fit. This is how you can fulfill your urgent financial requirements with a top-up loan.
How to apply for a top-up loan?
You can easily avail a home loan top-up with the following steps –
- You can call your lender or apply for the loan online
- Fill in the necessary details like personal, financial and employment details in your application form
- Mention the loan amount
- Furnish details of your existing housing loan
- Submit the mandatory documents and pay a minimal processing fee
All of these benefits of a top-up loan fare better than other credit facilities. Make sure to check the rate of interest and charges associated with the loan before you apply. Also, check whether you have to provide additional documents, which is not required in the majority of cases.