A top up loan is a kind of loan, which we can avail when we have already received the whole amount according to our need and eligibility. So, after a couple of years of the first disbursement of any home loan, you can again apply an amount roughly equal to what you have already paid. It’s a wonderful product and its approval is based upon our payment record. If we have a better credit history, top up loans are easier to get.
How it works?
For the bank, it’s preferable to offer someone a top up loan if he has already started paying the home loan and has paid some chunk of it, decreasing the outstanding amount, rather than issuing a loan to a complete stranger. So, it’s quite simple, and works like a refill, and you can avail the amount equal to the margin already paid by you. Moreover, you can meet your immediate need at a lower interest rate.
The understanding of the working is necessary to get the loan amount. Loan X Finance will offer immediate results to the borrowers. The experience of the borrowers and business is enhancing. The benefits are high with the learning about the working. The procedure is the simple and fast to get the desired results.
Objectives of a top up loan
The best part of the top up loan is that it comes at a much lower interest rate than the personal loans or the credit cards. You have to pay no additional EMI to pay this off and it’s not restricted to be used to pay the cost of your home, construction or renovation. You can use it for any urgent purpose you have in your mind such as higher education of your kids, some big household spending, marriage of your daughter or even buying a parking space for your vehicle. All of this comes to you without straining your budget or increasing your monthly payoffs through home loan top ups.
Can you apply for a top up loan?
First of all, you can apply for a top up loan, only if you already have a home loan and the amount you can avail is roughly equal to the margin of your initially borrowed amount and existing outstanding. Normally, you approach the same bank for a top up loan, which has already issued you the existing home loan, but in case the bank is reluctant to provide you the top up loan, despite your excellent payment record, you can always transfer your home loan to any other bank, which agrees to provide you a top up loan on lower rates.
Amount that can be availed as top up loan
When we say roughly equal to the margin, it may not be exactly equal but depends on many other factors that determine the loan amount you can avail. It depends on how much outstanding you still have with the bank, your increased ability to pay and also the current value of your property. In any case, the total loan amount including the top up should not exceed 70% of the existing value of your home. Some tax benefits are also associated with the top up loans, based on how we utilize it.