1. Top up loans provide an easier route to personal financing
2. Lower charges as well as the freedom to for any type of expense
3. Lower ceiling of total funds which can be given out
Sometimes all you need is that little extra to turn your dreams into a reality. A financial cushion to purchase a new car, send your kids to a good university or renovate your home. However, if you have taken a loan and are in the process of repayment, procuring another loan can put additional stress on your budget.
While availing a personal loan may seem like the only option for extra funds, a top-up loan can be your saviour. For example, Bajaj Finserv’s Top-up Loan can help fund these additional expenses, while providing savings in terms of time, energy and interest.
How does a Top Up Loan work?
Just as the name suggests, a top-up loan is an amount borrowed over and above your home loan amount. For instance, if you have recently purchased a home and are now looking to renovate, you might be considering your financing options. You might have an active home loan account of Rs.25 lakh, but you need funds to carry out the refurbishing. Here, you can apply for a top-up loan over and above your outstanding loan amount.
Why Top-up Loans are a better financial decision?
With a lower interest rate compared to other loans, as well as minimal paperwork, a top-up loan is a smarter choice for a variety of reasons. Listed below are the advantages of top-up loans have over regular loans:
a. Spend the Loan Amount on Other Expenses
A top up loan can be taken not only for home-related expenses but also for any other personal or business-related expenses. You can just as easily use the top up loan amount to pay off other debts, travel, education or medical expenses. It funds your needs regardless of their nature.
b. Tax Advantage
The tax benefit depends on the purpose you utilize the funds for. If you use the top-up loan amount for purchasing a home (principal and interest) or for renovation purposes, then you can avail tax exemption on the interest component of the loan under section 24 of the Income Tax Act.
c. No Collateral
Since the top up loan is given on top of your home loan, it does not require any additional security. It requires only a few documents such as an ID proof.
d. Lower Interest Rates
Top up loan interest rates are usually 0-1.5% above the home loan rates. Compared to the higher interest rates levied on personal loans, top up loans help you fulfil your financial goals, with a comparatively lower interest outgo.
One of the biggest disadvantages of a top-up loan is the upper limit. Since the valuation of the loan depends on the value of the existing property, getting a loan of a bigger amount can be difficult. However, given that a top-up loan is usually availed as an add-on to your home loan, your needs will be met with the amount.
One of the first things lenders consider is the property itself. Lenders are more likely to provide top-up loans against completed residential properties rather than properties under construction.
Lenders look at an individual’s repayment record for the past few months to a few years before approving a top-up loan. You can check your eligibility online to understand the documents you’ll need for the top up loan
Bajaj Finserv’s pre-approved offers from home loans, business loans to personal loans allow for easy financing with a simple process requiring minimal paperwork. Share a few basic details to know your pre-approved offer now.
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