Let’s know the concept and benefits of the top up loan that can help you address many needs/goals of your life super easy.
What is a top up loan?
Many online and reputed lenders such as banks and non-banking finance companies (NBFCs) have come up with the facility of the top up loan.
The facility is usually available when you switch your home loan from one lender to another to enjoy a better interest rate. Yes, when you opt for the home loan balance transfer, you also get the eligibility for lapping up the facility of the top up loan.
A top up loan is nothing but an extra add-on loan which is made available at a lower interest rate and longer tenors. You can apply for a top up loan of up to Rs.50 lakh. The eligibility for availing a top up loan is uncomplicated. All that you need to do is – ask for or apply for it. Your home loan documents are already with the lender and you don’t need to provide any more to become eligible for it.
However, your lender will also check if you have a consistent repayment history to award you a top up loan. Thus, if you have maintained a decent repayment track record, you won’t face issues in availing a top up loan of up to Rs.50 lakh.
Why avail the top up loan during the home loan balance transfer?
A home loan is a long-term commitment and hence while you are repaying it, you may face issues in catering to your other financial needs in your life. A top up loan can help you cover all such financial needs easily as it is a convenient source of money.
Some of the major benefits/reasons for availing a top up loan are:
- While availing the top up loan while applying for it during the home loan transfer process, a top up loan’s documentation is negligible. What’s more, you can also enjoy a faster disbursal. Also, leading lenders let you apply for a top up loan online which makes the whole process super easy and lightning fast.
- When you go ahead to apply for a top up loan, there is no need to disclose the purpose of applying for the loan to the lender at all. A top up loan is a loan that you are free to apply for any personal needs such as taking a vacation, doing a home renovation, and beyond.
- If you think of using/investing the top up loan towards your home improvement, then you have the eligibility to ask for a tax deduction on the interest that you will pay. It is applicable as per the Section 24 of the Income Tax Act.
- You can also use the top up loan amount to close current unsettled debts. The debts may have a higher interest rate and thus, to save some money, clearing the same with the help of the top up loan should be a smart step.
The Bottom Line
The immediate reasons/benefits of availing the top up loan are now clear to you. You can assess your needs accordingly and apply for a top up loan online!