3 Reasons Why You Should Opt for a Home Loan Top-up Today
Buying a property is an expensive affair. From arranging money for Home Loan down payments to buying new furniture, there are countless expenses that will leave your finances strained.
Additionally, you might need to get your kitchen fixed or the floors refurnished. In such cases, instead of emptying your savings, you should opt for other financing alternatives like a Top up Loan.
A Top up Loan is a collateral-free incremental loan sanctioned over your existing Home Loan, which can help you fulfill your financial obligations. Let’s take a look at a couple of reasons why a Top up Loan should be your go-to solution when you need quick cash.
Reasons Why Should You Opt for a Top-Up Loan
Easy Application Process
To apply for a Top up Loan, you just have to approach a lender and fill out an application form for a Home Loan Balance Transfer, and the option to top up the Home Loan amount will be provided to you. Some financial institutions like Bajaj Finserv have a hassle-free and convenient online application process which allows you to transfer your existing Home Loan to them and avail low interest rates. Also, you can simultaneously apply for a Top up loan that too at an attractive interest rate.
Lower Interest Rates
The Home Loan Top up interest rates are generally just 1% to 2.5% higher than Home Loan interest rates while the rate of interest for a Personal Loan can be anywhere between 14% to 20%. However, remember that the tenure of a Top up Loan is longer than that of Personal loan. Generally, you can opt for a 10-year tenure to repay such loan, but if you have just 6 years of tenure left on your Home Loan then the tenure of your Top up Loan can’t be more than that.
If you want to lower the rate of interest on your current Home Loan, you can opt for a Home Loan Balance Transfer. By approaching financial institutions, such as Bajaj Finserv, you can opt for a Home Loan Balance Transfer and a Top up Home Loan with just one application.
As a Home Loan Top up customer, you can claim tax benefits, but it’s dependent on the purpose of your loan. You can’t claim tax exemption on the loan if you’ve used it to finance a wedding, purchase a car, or fund a trip. Under Section 24, you can claim tax deductions on the interest paid if you’ve utilised the loan for home improvement purposes. But, tax deductions on the principal amount of the loan can’t be claimed unless it has been used for buying a property.
A Top up loan is definitely a better alternative to a Personal Loan because you can avail it at a low rate of interest and also claim tax deductions. On the other hand, if you have taken a Personal Loan, you can settle the debt by availing a Top up Loan. This way, you’ll be able to do away with the high interest charges you’re liable to pay for the Personal Loan. However, if you do apply for a Top up Loan, remember to avail it as soon as possible so that you have a longer tenure to repay it.