A top-up home loan is a smaller loan that you can borrow to add to an existing home loan. Top-up loans present a great alternative to personal or gold loans, especially when the funds are required to buy or renovate a house. It offers a highly flexible repayment tenure and can be issued within 24 to 48 hours.
Here are five essential things you must know before opting for a top-up.
Eligibility Criteria
Having an active home loan is the foremost eligibility requirement. You should record regular payments for the previous twelve months on the existing home loan. A good credit score is also essential for quick and easy approval of the top-up.
Home Loan Repayment Tenure
A top-up home loan offers a great degree of flexibility in repayment tenure. For instance, some banks provide assignments of up to even 15 years, allowing you plenty of time to pay off your loan. A longer tenure also means lower monthly EMIs.
Loan Amount Limit and Interest Rates
The top-up amount limit can be as high as 70% to 80% of the total value of the property. These loans come with much lower interest rates than many other types of borrowing, such as a personal loan or gold loan. Top-up home loans usually carry an interest rate of between 8% and 10%, whereas a personal loan or gold loan may charge up to 26% interest.
Tax Benefits
The tax deductions you can enjoy with a home loan are also available for the top-up. This means that you can get tax benefits of up to ₹1.5 lakhs on your taxable income for a financial year under Section 80C of the Indian Income Tax Act. However, such tax benefits are not available for most other types of loans, including gold or personal loans and loans against credit cards.
Multiple Opportunities
One of the many great things about top-up loans is that they can be put to different uses, from getting your house repaired, repainted, remodeled, and more. Therefore, it offers you numerous possibilities. You might want to build an extra room for a growing child or give your furniture a makeover. Whatever the need, you can use this top-up to fund it.
Moreover, there are entirely new benefits on such home loans for women. Some of the critical home loans offers include benefits such as a lower interest rate and lower stamp duty. However, to understand precisely how much you will need to repay, don’t forget to consider the GST on the home loan. The best part is that these loans are much more accessible and hassle-free. Walk into the closest bank branch, and the representatives can help you with the entire process.
