4 Compelling Reasons to Go for Top-Up Loans Over a Personal Loan
You might be faced with a situation in life, where you require additional funds to renovate your home or buy a car for your family. But, since you have already availed of a home loan and have not yet repaid the loan, getting another loan can be very risky. In this case, you might even think of getting a personal loan from a bank. But, before going for it, check out the amazing fundraising option called a top-up loan, which can save you from spending your fortune paying the hefty personal loan interests.
A top-up loan, meaning a loan that you can avail on top of your current home loan, is an ideal way to deal with your financial setbacks. There are many banks and nonbanking financial institutions that offer a top-up loan on home loans. For instance, Bajaj Finserv offers Top-up Loan options for existing Home Loan customers at a lower rate of interest than Personal Loans.
Here are the top four reasons, why you should prefer top-up loans over a personal loan.
You Get to Spend on Anything You Desire
A top-up loan is just like a personal loan, which means your spending is not restricted to any particular cause. You can spend the money on your private expenses, such as renovating your home, buying a vehicle, or covering medical expenses. Many financial institutions such as Bajaj Finserv also facilitate quick loan approval and disbursement, if you have an existing account with the lender.
Pay Less, Get More
The interest rate offered on top-up loans is slightly higher than the normal home loan interest rate. But, this is much lower when compared to a personal loan, where the interest rate usually ranges between 14% and 20%. That’s why, a top-up loan is considered one of the best fundraising alternatives to personal loans.
When you top up an existing loan, there are also chances that you get a loan amount as high as your existing home loan amount. For example, if you have paid a part of your loan and your income has increased over the years, then your loan eligibility goes up. This results in a higher upper limit for your top-up loan.
Doesn’t Require Extra Collateral
Since you already have a secured loan account, getting a top-up loan doesn’t require any additional security. If you have completed 6-12 months of home loan repayment at Bajaj Finserv, all you need to do is visit the website and fill up the application form for the top-up loan. The only documents that you might require are your salary slip and some ID proofs.
You Become Eligible for Tax Benefits
Under section 24 of the IT Act, when you take a top-up loan, tax benefits can be availed on the interest that is paid during the financial year. This tax benefit depends on the purpose you utilise the loan for. If you are exclusively looking for a loan to repair or renovate your home, you can even extend the top-up loan tax exemption to the principal amount.
In case of an emergency, opting for a top-up loan is a better option than a personal loan. Having said that, the only requirement for availing of a top-up loan is a clean track record of your past loan repayments. So, the next time you are looking for any additional funds, meet with your lender and make the convenient choice.