Top Up Loans Explained
A top up loan can be defined as an additional sum of money that is offered over and above the home loan. This loan can help you for financing home-related tasks like repairs and renovations, adding a new wing or garage facility or for buying new furniture, electronics and furnishings. Conversely, it may be used by you for any other reason such as buying an asset or for various other personal or business needs.
There are various benefits of availing a home loan top up. Firstly, it works as an additional source of finance and secondly, it offers low interest and a long tenor. It also requires very little documentation since you are already a customer of the lender you are taking a top up loan from and there is no additional security asked from you. Usually, the top up loan amount that you can avail is calculated by taking 75% of the present value of your home minus the outstanding amount on your home loan.
What Is A Top Up Loan?
If you are wondering about the features of top up loans and what they are, read on for insight:
- It is an additional loan offered to you: Once you have borrowed a home loan, a top up loan is an additional sum of money that lenders offer you after a certain amount of time has passed. Your repayment behaviour and timeliness of EMI payments are studied by the lender before offering you a top up loan. You will also get a top up loan when you opt for a home loan balance transfer with your new lender.
- It has a hassle-free application: Most of your application formalities are already done when for your home loan or balance transfer. Hence, a top up loan requires minimal paperwork, which makes it a blessing for borrowers.
- It is offered on low interest rates: The most important and popular feature of a top up loan is that it has low interest rates as compared to other loans. Hence, whenever a home loan borrower needs to borrow a substantial sum of money, it is better to avail a top up loan.
- It allows for a long and comfortable tenor: The top up loan normally has the same length of repayment as the time you have left to pay off your home loan. Since home loans can be repaid up to 25 years, even if you opt for a top up loan 5 years later, you still have a long tenor on your new loan. If it is a long tenor, then your EMI amounts are likely to be less as they are spread across a long term. This makes it convenient for you to make timely payments.
- It is an affordable source of finance: Top up loans can work out as an inexpensive source of finance for you. The sum received from the top up loan can be used for any purpose like financing house repairs or financing your child’s marriage. The purpose for which you use the top up loan depends completely on you, and this also makes it a coveted source of funding.
- A service available only for existing loan borrowers: This loan facility is not available for everyone. It is a select facility that is available only to the borrowers of a home loan, and so you stand to gain a lot should you make use of it.
Also Read : How Can You Benefit From A Top Up Loan?
Looking for the convenience of substantial funds at affordable costs via a top up loan? Get one when you take a home loan or do a home loan refinance with Bajaj Finserv.