What Is The Procedure For Obtaining A Top Up Loan

Say ‘Yes’ to a Top-Up Loan when it comes to a loan. Life is unpredictable, and the circumstances you encounter are frequently unforeseeable. What will you do if you find yourself in a scenario where you require additional funds? You may already have a house loan and want to take out another one to cover your unforeseen needs. So there’s no need to take out another loan! You can now add to your existing house loan rather than taking out a new one since it is more convenient. Here’s everything you need to know about refinancing your existing mortgage.

What is the procedure for obtaining a top-up loan?

When you apply for a home loan for the first time, you will be limited in the amount you can borrow. If you’ve already used up all of your credit, you won’t be able to take out another loan right away. However, your income may have increased over time, and you may have repaid a portion of your debt. As a result of these favorable aspects, your loan eligibility has increased. You will be able to refinance your existing home loan in these instances.

A top-up option on a house loan is usually only available after 6-12 months of paying off the previous loan, according to most home loan conditions. You can get a top-up on your existing home loan provided you have a strong payments history. The loan provider will explore the need for a top-up further, and they will make the final decision on whether or not to approve it.

Here are some of the reasons why you might want to take out a second mortgage on top of your current one.

It is possible to use it as a personal loan

To acquire a second home

To buy a new piece of property

To improve your residenc

Purchase of consumer goods

For the education and marriage of your ward

For business purposes

To cover medical costs

What are the benefits of applying for a top-up loan?

You don’t have to hold any of your assets as collateral when you opt to increase your existing loan. However, keep in mind that in order to regain possession of the papers, you must repay both the original and the additional debt.

If you use the money from the top-up loan to buy a house or renovate your home, you may be eligible for tax incentives. Apart from that, there are no tax advantages to using the top-up for any other reason.

You can take a top-up loan based on your original loan amount and eligibility until you reach the bank’s maximum limit. It might cost anywhere from 15 to 40 lakhs. For example, if you have a loan of Rs. 30 lakh and your maximum limit is Rs. 60 lakh, you can top it up with another Rs. 30 lakh loan on the same asset.

For authorising a top-up loan, most banks charge a processing fee. These fees are frequently the same as the processing fees for house loans. For example, a bank may impose a processing fee of 0.75 percent of the amount or Rs.2000, whichever is higher, for a top-up loan.

The interest rate on the top-up loan is only 1.5 percent to 2% more than the interest rate on the home loan. This might amount to 11.5 percent to 14 percent of the loan amount, which is still less than a personal loan.

Personal Loan Vs Additional Loan

A top-up loan is unquestionably a better option than a personal loan. Personal loans frequently have interest rates between 18-24 percent. When you compare the characteristics described above to those of a personal loan, you’ll see that topping up your existing loan is considerably easier and more beneficial than taking out a personal loan. You may be eligible to top-up your existing home loan if you maintain a solid loan repayment track record over a set length of time.

Taking out a top-up loan is becoming increasingly prevalent in today’s world. It is a preferred option over other sorts of loans because of the numerous benefits it offers and the convenience with which it can be obtained. It’s critical to understand the various home loan policies and finer details in order to get the most out of whatever loan you take out. Maintain a strong track record, and you’ll have peace of mind knowing that if the need arises, you can always acquire a top-up on your current loan.