4 Reasons for Availing a Top-up Loan
Taking a Home Loan to buy a property is a safe and wise financial decision but sometimes the additional expenses of setting up a new place can leave a dent in your finances. A Home Loan will help you purchase a house but what about the additional expenses that follow? You might need to buy some furniture for your house, get durable products like refrigerator, washing machine, and TV, and complete electric/plumbing work, if any. Instead of paying for these expenses from your own pocket, you can avail a Home Loan Top Up and cover all the additional costs.
Some Reasons Why You Should Take a Top up Loan
Hassle-Free Application Process
A Top up Loan is availed over a Home Loan, which means you don’t have to submit your documents all over again. Once your Home Loan has been sanctioned and you’re already a few months into it, you can apply for a Top-up Loan. In order to get it approved, all you need is a good CIBIL score and an excellent repayment record.
You can approach the same bank or NBFC from which you took the Home Loan for a Top-up Loan or you could opt for a Home Loan Balance Transfer and then apply for this additional loan at the new financial institution. Financial institutions like Bajaj Finserv provide a smooth Online Balance Transfer process and attractive services.
You can claim tax deduction on the interest portion of your Top-up Loan if you’ve utilised it for acquisition, construction, repair, or renovation of your property. For example, if you bought a parking space, a property acquisition of sorts, and used the Top-up Loan to pay for it, you can claim tax deduction under Section 24 of the Income Tax Act. However, remember to keep all the transactions well-documented so that the taxation process goes smoothly.
Clear Unsecured Loans
If you have any unsecured loan like a Personal Loan, take a Top-up Loan and clear it as soon as possible. The reason for doing so is that a Top Up Loan interest rate (generally 1% to 2.5% higher than Home Loan rate) is low and comes with a longer tenure. On the other hand, a Personal Loan usually has a short tenure and a high rate of interest (around 16% to 20%). So, if you don’t want to keep paying high interest charges for your unsecured loan, clear it off with the help of a Top-up loan.
Fulfill Other Financial Needs
The best thing about a Top-up Loan is that you can use it for any financial purpose you want. Although you might not be able to claim tax benefits on it, it’ll definitely help you on the savings side as it’s cheaper than a Personal Loan. You can use the money for a variety of purposes like paying for your child’s education or wedding, going on a vacation abroad, getting a new vehicle, or clearing medical bills.
A Top-up Loan is one of the best options when it comes to availing a quick and affordable loan for meeting your financial goals. And, if you come across some extra funds, you can utilise it to repay the Top-up Loan. NBFCs like Bajaj Finserv allow you to foreclose or prepay your loan account at no extra cost. So, if you’re in need for funds and have opted for a Home Loan, go for a Top-up Loan and sort all your financial issues.